I think Leia may have been the youngest investor ever to approach me about building a real estate investment business. I suspected that she wasn’t even out of college yet, and I was right. She is getting close to finishing her studies, though. Rather than rushing right out to join the corporate world as her peers are planning to do, she’s hoping to follow a different path—the one her grandparents took when they started investing in real estate after retirement. The difference, however, is that she wants to begin her career as soon as possible. With her grandparents now really retired and traveling abroad, she came to me, a seasoned investor with a lot to say on the topic. If, like Leia, you’re interested in real estate investing, knowing where to start can be overwhelming. But, you’ve come to the right place by reading this blog.
Where to Start Your Real Estate Investing Career
Like I told Leia, the first place you’ll want to start your real estate investing career is in the classroom. There are plenty of books on real estate investing as well as online courses and weekend seminars. But, only a comprehensive training program will arm you with the knowledge you need to start buying properties professionally. And, that program should be taught by real estate investors with active experience in the field who’ve had a measurable amount of success themselves.
When you’re a new investor, however, the learning doesn’t necessarily stop once you get out of the classroom and into the working world. So, if you can afford to invest in one-on-one mentoring to help you through any unexpected bumps in the road, building your business may go a lot smoother. A network of fellow investors with more know-how than you will also most certainly help. Having folks you can turn to who’ve already been where you are can fast-track your ability to make good investment property decisions provided you can trust their advice and are willing to follow it.
OK, so, where do you go from there? When you are in the field, what do you do to start actively building your business after you’ve built up your knowledge? You strategize. Let me explain.
To be able to build upon your early successes fast, you’ve got to formulate a real estate investment strategy that helps you realize decent returns with every deal. To put it simply, you need to choose a niche. Some investors buy, renovate, and resell luxury houses while others find and fix up multi-family units, but my experience has been that purchasing single-family homes provides the most potential for earning predictable profits. First, it’s typically less expensive to buy and rehab single-family residences (SFRs) than either luxury homes or multi-family units. Then, when it’s time to sell, there tends to be more buyers. Additionally, the short time horizon—about three to nine months—for turning an SFR around then returning it to the market lets you more accurately estimate what your returns will be and plan your next purchase accordingly.
But, building your business by buying single-family homes as investment property takes a little savvy in the beginning. So, I’ve got three suggestions to help you keep the work manageable and your potential for profits more probable.
- Buy houses close to where you live. Specializing in buying, renovating, and selling houses in only one or two areas at a time—especially if they’re close to home—can help to potentially minimize risks and maximize returns. You’ll already be familiar with both the benefits and the drawbacks of the neighborhood, who your target market is, and what homes are being bought and sold for. With very little effort, you’ll be the expert. And, by investing in properties close to where you live, the time you spend getting to and from them won’t be wasted on long commutes or sitting in traffic. With plenty of time and energy on your hands, you’ll be able to focus on what counts: buying more properties.
- Buy houses that are easy to rehab. Buying and renovating minor fixer-uppers for your first few deals is a great way to hone your new skills without making any major mistakes. It may not sound very exciting to you, but a fresh coat of neutral paint, updated fixtures, and new landscaping go a long way toward creating a wow factor for buyers—and increasing a home’s value. And, in this business, practice often makes perfect. So, you’ll want to make sure you can get the simplest updates, and your initial estimated returns, right first, before taking on a pricey project that could push you and your ROI off the rails. Build on your expertise and you’ll build up your business.
- Buy houses that you can rent to cover the mortgage if necessary. Though buying houses to rehab and resell is a good go-to investment strategy, you should only buy homes that you can rent out to cover the mortgage if you have to. Occasionally, the market can shift during the rehab and make selling your investment property difficult. But, what happens more often to new investors is that the costs for the repairs simply outrun the projected ROI. Since real estate typically appreciates over time, however, all is not lost should this happen. If you can rent the property at a price that covers the mortgage and your other monthly expenses, you might win in the short and long run—and learn a thing or two about correctly calculating costs in the interim.
Not only can these three tips make the process of building your business easier, they can also make your chances of success in the beginning and over the long haul better. You’ll still have to work hard, of course. But, that’s true of any new entrepreneurial endeavor you decide to take on. If you can also make it a team effort, however, you might find buying, rehabbing, and selling homes for a living can go that much smoother.
Build a Strong Real Estate Investing Business With the Support of a Strong Team
When you’ve been investing in real estate for as long as I have, you get approached a lot by new investors looking for guidance on how to get started. And, honestly, I’m glad it happens. Had I not gotten good advice from an independently owned and operated HomeVestors® franchisee when I was trying to build my investment business, I’m not so sure I’d be as successful as I am today. So, it’s important to me to pay it forward to folks like Leia.
Of course, the best advice I ever got was to join the HomeVestors® team. By becoming an independently owned and operated HomeVestors® franchisee, I was immediately set up with a comprehensive week-long initial training program that taught me the nuts and bolts of how to build a strong business. Afterward, I got access to my own Development Agent—an experienced personal real estate investing mentor who helped me keep my goals, and my business, on track—especially during the first few deals. And, I’m always in touch with my network of fellow local and regional HomeVestors® franchisees. We help each other out in every way possible, whether it’s staying on top of the latest renovation trends or making recommendations on where to find the best contractor for a harder-than-usual job. In short, franchising with HomeVestors gave me the support I needed to build an investment strategy, and a career, that I now get to talk about to up-and-coming investors, like Leia. I don’t think I can make a more helpful or stronger suggestion than that.
Start investing in real estate with a team that will support your goals every step of the way. Give HomeVestors a call to discuss franchising opportunities today!
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