Real Estate Investment for Beginners

Real Estate Investment for Beginners

 

Real estate, investment, and business in general can seem overwhelming to the uninitiated, as these practices aren’t typically taught in school the same way science or history is. Luckily, IMS Realty Property Management is here to help. Here are some of our tips for beginning real estate investors.

 

• Find your own rhythm. What works for everybody else might not always work for you. The market varies widely, and if you find yourself in a certain niche, don’t try and compare your progress (or lack thereof) to anyone else. Focus on yourself and your work, and don’t stress yourself out about trying to know and become a master of everything. This will result in burnout, not progress.

 

• Ask for help! If you’re a beginner, there’s no need to feel embarrassed. Every investing giant was a beginner once. Don’t get caught up in some made-up competition; just ask for help and associate yourself with people who are willing to teach you. Seeking out help from more experienced people is the best way to build fruitful relationships and learn about your own skills.

• Don’t jeopardize your family life or mental health. Some people view investing as gambling, and they can get seriously addicted to the excitement of taking risks or become a workaholic. It’s a thrill, but it takes a lot of work and energy, so plan accordingly.

 

• In fact, we suggest writing a business plan. Even if it’s informal, it’s a good idea to chart out where you want to go and how you think you could go there. Then show this plan to one of your trusted friends, preferably with somebody who’s made mistakes in the past and can tell you how to avoid them.

 

• You don’t need to be Einstein to know math is crucial here. It’s okay if you weren’t a calculus major in college; most of the arithmetic is pretty simple, and it’s really a matter of keeping track of things that’s the hard part. Just have your calculator on hand at all time and don’t try and make things up to make yourself feel better. Be conservative in your estimates – you’ll appreciate it later.

 

• Don’t panic when things go south. It’s bound to happen, so don’t be too surprised when it does. However, just remember no roadblock is insurmountable. Review your notes, make some phone calls, and get back out there. Persistence is key; you’ll need it.

• Treat investing like a business, not a hobby or a game. We touched on this earlier, but it’s worth re-stating. As time passes, take note of what systems and processes work for you, and then implement them as rules. Even if you’re the only person in your business, act as though you’re both reporting to a big boss and passing the torch to an apprentice. Clearly define your thought process and the principles that govern how you do things. Make note of any changes in your techniques – and embrace these changes as they come, don’t fear them!

 

• Use debt wisely. Debt is scary and takes a lot of discipline to handle correctly. If you’re purchasing a property, go ahead and take out a mortgage if you believe it will offer you good profits down the line, but don’t go crazy. Real estate is an attractive business because many aspiring entrepreneurs like the idea of obtaining properties they otherwise wouldn’t be able to afford, but it can be a quick path to bankruptcy. In every case, it’s important to weigh out the pros and cons.

 

• Consult with an attorney about how best to take out these investments. It’s pretty rare to make a purchase using your own name. Rather, you’ll likely take out these purchases through certain legal entities, such as limited partnerships or limited liability companies. This will allow you to protect your personal assets from any worst-case scenario.

 

In the spirit of comradely, we encourage you to share your own tried-and-true real estate investment tips. Again, we were all beginners once, and we all would have appreciated an extra helping hand. At the end of the day, it’s most important for you to build a support system of advisers yet balance when to listen to your gut. Ultimately, this will only come experience.

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