Real estate investor are people who invest in real assets. Becoming a real estate investor is easy, continue reading to know more.
Want to become one? Don’t know from where to start? All beginners face the same problem what to do? How to do? What is right and what is wrong!! Right guidance is very important to become a good real estate investor and we are here to help you out.
Real estate investment is sale, purchase, acquisition of asset or an investment to generate income and profits. Real estate investor is a person who invest in real estate investments. The investor assesses the investment market to generate revenue.
A real estate investor has several options to invest in such as:
· Rental properties
Rental properties are the most common and the safest type of investment a real estate investor can do. The rental income maintains your monthly cashflows and make sure it also covers your cost of acquisition of your investment. While purchasing a rental property try to negotiate and go below the market value of the property. The investors also make a lot of money through property appreciation.
· House flipping
House flipping is also known as wholesale real estate investment. House flipping is also very common real estate investment among the investors. In this type of investment, the investor buys the property with an intention to resale it with a purpose to gain profit i.e., by buying at a low market price and selling at a high market price.
· Real estate investment groups (REIGs)
Real estate investment groups are for investors who want to own a real estate investment, but don’t want to manage it. In REITS, the company owns or acquires the property and asks the investor to purchase it through the company. And, then the company manages the property on behalf of investor.
· Real estate investment trusts (REITs)
Real estate investment trusts (REITs) are created by using investors’ money to buy, manage and operate properties. REITs usually invest in malls, healthcare facilities and office buildings. REITs are perfect for investors who seek a regular income.
In Crowdfunding funds are raised by a group of investors to collect large money and invest in a project. The investors get profit or shares of company in return of doing an investment. Make sure you do crowdfund with a reliable resource as there are many fake crowdfunding companies.
Also read how to do Real estate investment like a pro
Things to consider becoming a real estate investor
Location plays a very important role in case of investments. If the area is near mall, hospital, park then the price of location will automatically increase. If the area is near slums or the area is underdeveloped then the price of location will be automatically low.
· Short term and long-term investment
Decide whether you want to do a short-term investment or a long-term investment. Short term investments are more liquid in nature and can provide you instant cashflow. If you want to invest in long term investment, then a residential property and commercial property are perfect for you. Rental estate is also a good option as it would provide you cashflow on a consistent basis.
Capital is another important aspect for a real estate investor. The investments are limited by the capital in the hand of investor. The capital decides the level to which the investor can invest in property. Real estate investor needs to analyse is the property worth the money spent? Is the property under rated or overrated? This can be analysed after gaining some experience in the investment industry.
· Time Investment
Time is money. The efforts and the time required to study and do investment is precious. There is always a perfect time to make an investment and come out of an investment.
- You want to purchase a house and the house is selling at a very fast pace. In this case time is the essence, you need to quick in purchasing the property.
- You have a land in an underdeveloped area where the price of land is slipping down at a high rate, here the time is quite sensitive. You need to sell of the property as soon as possible so you do not suffer losses.
Also read how to maximize real estate investment?
What all do you need to become a real estate investor?
· Enlighten yourself
It is very crucial to have knowledge about the work you want to do. Enlighten and educate yourself by reading books, seeing online videos, join local groups on social media such as Facebook and telegram and join the local groups near you. Joining local real estate group would help you to know what the current market situation of investments is, where it would be beneficial to invest and at what time.
· Build your network
It is very important to build a network of real estate investors. Always maintain good relations with your peers. It will not only help you in gaining knowledge but also help you in grabbing opportunities.
People to include in your network
- Private investors- Private investors are the people who can invest in your business if they like your idea or business.
- Banks/ Private loan providing companies – Banks and private lending companies can provide you money in hour of need.
· Decide your real estate investor strategy
For becoming a good real estate investor, you must decide and apply your strategy before-hand. Active: An active real estate investment includes purchasing and managing the real estate investment.
Passive: A passive real estate investment includes investing in real estate partnership, companies where the investor does not need to manage the real estate investment.
· Decide a niche
It is important for a real estate investor to develop a niche and gain knowledge in depth to be a successful real estate investor. First you must be expert in a particular niche, then you can jump to another niche. It is important to gain knowledge in a particular niche as half knowledge is never useful.
· Analyse risk
Risk analyzation is very important for a real estate investor. The investor must know the risk involved in each type of investment he/she does, what is the right time to do a particular investment, what can be done to reduce the risk involved. The investor must also analyse the return the investment would give after a certain period and if the investment is fruitful or not.
· Working capital
You must always have enough capital in your hand, especially the beginners in real estate investment. The investment business may require money more than expected. Generate and maintain your cashflow so that you have enough money every month.
Although real estate investors are not bind to anything, but the investor needs to be completely honest with the customers to maintain ethics and provide best services to the customers. The best investors are those who have maintained their standards of work and ethics.
· Stay updated
A real estate investor should always stay updated with the investment market as the market is uncertain and changes can happen any time. This type of investment involves a large amount of money. So, each step should be taken carefully with due diligence. You can read magazines, see news, and even download investment apps on your mobile phones to stay updated.
Patience is a very important aspect for a real estate investor. Patience and is the key to success in investments. A good analysis is required before investing and while maintaining investment. Few people think that they have brought an investment now they have a safe hand, but it is not the end. Keep an eye on price of the property, buy the property as the price falls and sell when the price rises keeping the location of investment in mind.
Although you won’t turn into a perfect real estate investor in a duration of few days. This requires consistent hard work, knowledge, patience, and determination. But you have what it takes to become a real estate investor. You just need to stay updated with the investment market and take your steps accordingly.
Follow all the tips and get set to start your career as a real estate investor!
Read more on real estate related topics:
- Realtor vs Real Estate Agent – Key Differences and Roles
- What Is Wholesaling Real Estate ?
- Understanding Four Phases of Real Estate Cycle
Hope you enjoyed this post on becoming a real estate investor, let me know what you think in the comment section below.