Real estate investing is not for everyone. After all, nothing ever really is, what you want to do is find what is right for you. Now, if you have decided that real estate investing is for you or would simply like to learn more about it, then this will be perfect for you. See, there are several essentials of investing (you can check out a great article on the topic by clicking the link) in real estate you should know that will help you extraordinarily.
As a real estate investor who’s just a novice a lot of the things you hear on the internet may seem confusing, difficult or even completely unhelpful. Well, the truth about it all is it doesn’t need to be, in this article, I’ll break things down so they are simple for you to understand.
If you want to construct a real estate investment business, there are basically 3 key things you need. They are:
3)Cashing out on deals
So, how do you find the right deals to invest in as a real estate investor? Well, there are lots of ways to skin a cat just like there are lots of ways to find a deal. To keep things simple, we’ll start with the foundation, (link to another great article about the foundation of a great real estate business) and the foundation is this: before you begin looking for deals, you have to know what your looking for. So, how do you know what to look for? simple, you set a criterion based off of the type of property that would be a no brainer investment for you. For instance, you may filter the types of properties you want to purchase between things like residential and commercial, or between condominiums or detached homes. The principles are the same, you’re basically narrowing down your options from the countless types of real estate investments to the ones best suited to your level of understanding. Once you do this, you can begin marketing to find properties that fit your criteria.
To market to find properties that fit your criteria, you can post on craigslist the type of property you are looking for. You can go online and check different websites to see if they have homes that fit your criteria. Now, both of the two previous methods I named work. However, if you want another thing you can do to find deals, you can contact your local realtor and ask him to give you partial access to the MLS and set the criteria your looking for if it’s a home to get notified anytime a home that fits your criteria is listed for sale. A buddy of mine got some great deals by contacting his real estate broker in south surrey. If it worked for him in his market, it can probably work for you in yours.
There’s a lot more you can do to find deals, and a lot more you can go into. But, to keep things simple, I’ll leave it at this so you don’t get overwhelmed.
2) Funding Deals
There are main ways to fund deals. You can use creative financing, conventional financing, and private financing. Private financing typically comes from a single individual such as a family member, a close friend or a single investor. Conventional financing involves getting financing from financial institutions like banks via a mortgage or in some cases insurance companies, both of which are considered institutional lenders. Lastly, there is creative financing which is likely the best source for you if you don’t have many connections or don’t qualify for regular mortgages. There are many different types of creative financing (hence the name creative financing) however, to keep things simple, I’m going to be talking about hard-money lenders. Hard money lenders area group of individuals (usually investors) that invest in a fund that’s basically a bank for real estate. The beauty of this type of financing is its asset based lending so they decide whether or not to give you the money based off of the value of the asset you’re looking to get a loan from rather than your own credit rating and ability to pay off the loan like conventional lenders.
3) Cashing out on deals
If you did your previous few steps right, mainly the one with setting your criteria and you have hit the nail right on the head and have gotten a great property that makes you money through cash flow, or appreciation, then this part should be fairly simple. If you’re looking to flip the property and sell it, you can simple list if with a superstar agent and get it sold and cash out, if you’re looking to make money off the cash flow, then you can just keep taking in cash flow (duh?) and if you you’re waiting for it to appreciate, you simple sell it when it comes time to sell it.
This was my take on real estate investing simplified for beginners. This may not be everything there is in the world to know about real estate investing, however, I do hope it was enough to get you started. Wish you the best of luck with your investing.