If you are looking for ways to increase your investment portfolio’s diversity, you may have begun researching real estate investment. Although real estate has a lower volatility than the stock market and is a real asset, these investments also have risks that you should understand and prepare for. These are a few tips to help you succeed on your investment journey.
Find a Mentor
Your first step should be interviewing successful investors and choosing at least one to become your mentor. This individual should have extensive experience in property investments in general as well as specific experience in the type of investments you hope to make. For example, commercial and residential investors look for very different things when choosing a property, so find a mentor who can work with you on the type of investments you seek.
Spend time shadowing this professional through a few acquisitions. Then, ask for advice and guidance during your first few investments. You may also ask about any resources or knowledge you should gain before investing in your first property.
Create an Investment Plan
The key to a successful investment strategy is a thorough plan. You need to treat your real estate investment process as if it was a business. Therefore, include your short- and long-term goals, including how many properties you plan to purchase. Also, discuss your strategy. For example, will you lease them out or are you interested in a fix-and-flip scenario?
Discuss your budget and expected income, including your rental cash flows. Discuss how much you are willing to spend on updating your properties and what types of tenants you hope to acquire. You may even discuss your desired location, even if it is only your initial investment area.
Build Your Team
Real estate investing cannot be done alone, and the strength of your team determines your level of success. Therefore, build a great one. Find a realtor you trust who has extensive experience. You may also seek the help of an accountant and attorney. Consider finding at least one contractor who can provide high-quality work at a reasonable price within a tight time limit. Your mentor should also stay on your team. Also, build relationships with title companies and financial institutions.
Do Your Research
Market research will be key to your success. You need to understand the geographic region, type of investment and current trends in the area. For example, consider the local unemployment rate, spending trends, mortgage rates, future outlook, building rates, business environment and rental availability.
Building a real estate investment strategy is exciting. These are a few tips to help you get started.