Three Steps to Get Started as a Real Estate Investor

1 – Determine your approach and your investment objectives

Are you looking to “buy and flip” or “buy and hold”?  If you’re looking to buy and flip, you’d probably want to start looking for homes that have the highest potential resale value after-improvements.  If you’re looking to buy and hold, you’d probably want to start looking for homes that have the highest potential cash-flow opportunities.

2 – Determine your budget

It’s a smart idea to “never be 100% invested” when you invest in real estate.  For example, if you have $100,000 available to invest, you may want to set aside some of that money in cash (typically 20% - 40%).  This way you have some money left-over for unexpected expenses, such as replacing a roof or to pay the mortgage, taxes, and maintenance expenses if the property sits vacant for a while.

3 – Go for it… strategically!

Once you’ve determined your approach and your budget, the next step is to just go for it!  Like any other financial decision, you want to take a strategic approach.  Here are two questions to ask yourself with every investment, including real estate:

• What’s my rate of return? It’s always smart to run an Internal Rate of Return (IRR) calculation on every investment opportunity. You can do so on your own with a financial calculator, or I can help you with this using my IRR Calculator.
• What are the risks involved? This could include vacancy risk or higher-than-expected improvement costs.

Contact me for more information!