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Investing in real estate can be both fun and extremely lucrative. However, if you’re new, it will take time and a great deal of effort to become a successful real estate investor. Here are four of steps you need to take in order to successfully get into your first real estate deal.
The first step in investing is deciding exactly how you want to invest, as there are many different ways to profit from real estate. For beginners, purchasing a rental property is one widely preferred method. If you are handy, though, you can get into flipping houses as well. Some new real estate investors get into wholesaling, though legal issues in certain places can make this difficult. Larger projects, such as commercial development, aren’t particularly beginner friendly.
Once you’ve decided what kind of investing you want to do, it’s time to consume as much information as you can. You want to know how to evaluate potential investment properties for their cash-on-cash return, as well as estimate potential repair costs accurately. The more you know about the facets of evaluating a property, the more likely it is you’ll be successful.
Once you feel confident that you know what you’re looking for, it’s time to set about finding your very first investment property. Since you need to be able to look through listings quickly and select those that meet your requirements, it’s a good idea to work with a real estate agent like James Rowlett with Houston Home Team REMAX Northwest, Realtors or someone similar at this stage. Be sure you already have some idea of what you’re willing to spend and what condition you want the property to be in. Often, agents will know what makes a good investment property, allowing them to point you in the direction of potentially good deals.
All of the preparation you put into learning and finding a property ultimately leads up to the moment you actually buy your first investment. Unless you can pay for a property out of pocket, you’ll need to get some kind of outside funding. For your first investment property, a traditional bank mortgage is usually suitable, though you may want to explore hard money lenders later on. Be sure you borrow enough to cover the price of the house, closing costs, taxes and whatever repairs you need to make.
Using this basic outline, you can take your first steps in the exciting world of real estate investment. If you find the right property, you can start to see a steady cash flow fairly quickly.