I’ve made a pretty good business out of flipping houses. That means I’m pretty well known around town. So, when someone has a question about the best way to get started in real estate investing, they usually come to me. That’s how I met Phil. He’s a local architect who’s worked with one of my buddies and when he found out I am an investor, he couldn’t wait to pick my brain. I remember having that kind of fire in me when I was ready to start my real estate investing career. In fact, I still have it. Wanting to make sure Phil didn’t let anything put that fire out, I invited him out for a beer. We talked a long while about how many folks get started in real estate investing. Then, I told him how I did.
The Best Way to Get Started in Real Estate Investing
Real estate investing is a big draw for would-be entrepreneurs for several reasons. The main one is that you can be your own boss. You can work part-time or full-time, have control over which hours you work each day, and pick the pros you work with. Also, your personal earning potential, and the growth of your business overall, are determined by you—something that working for someone else never guarantees. By becoming a real estate investor, you have a real say in how you spend your working days and whether those days will pay off.
But, how do you get started in real estate investing? There are a few ways to do it and any one of them—or a combination of them—will help. Here are some of the ways to begin:
1. Jump right in.
There are plenty of television shows out there that make buying and renovating property look so easy that it’s hard to believe you can’t just jump right in. Some investors do. If you’ve got financial backing, an understanding of your local market, and experience in a related field—like construction or real estate sales—it might feel like you’re ahead of the curve. And, maybe, you are. If you’ve also got a high tolerance for risk, a background in investing, and know how to construct and execute a real estate investment business plan, jumping right in isn’t entirely unreasonable.
But, the danger of this lies in the myriad unknowns that investing in property presents to the new investor—no matter your previous experience or background. Without knowing how to accurately estimate repairs, for example, you could end up sinking more money into the renovation than is necessary. If you don’t know how to rehab then market your property to a specific demographic, you might not be able to sell quickly or at a good price. There are a number of scenarios that can take you by surprise and sink your potential returns if you’re not prepared. And, no house-flipping show can help you.
2. Join an investment club.
Joining a real estate investment club gives you the chance to network with a variety of real estate industry professionals. Most clubs hold regular meetings, offer classes, and schedule special networking events and workshops. You may hobnob with real estate agents, attorneys, contractors, mortgage brokers, and hard money lenders—all of whom can give you insights into how they do business and how it could affect yours. You’ll also have the opportunity meet experienced real estate investors who might be willing to help you learn from their mistakes and successes. Because networking is an important element in succeeding as a real estate investor anyway, joining a few real estate investor clubs isn’t a bad place to start connecting with peers and building your career.
Unfortunately, you won’t learn all there is to know about investing in real estate by joining clubs and groups. Workshops are typically scheduled only monthly and classes are often held just as infrequently. And, there’s no way to tell if what’s being taught in a class, or discussed at a meeting for that matter, is worth your time until you get there. Plus, most of the investors you meet will be as inexperienced, or more, as you are. So, you’re looking at joining multiple clubs just for the chance of attending enough meetings that may, or may not, jump-start your career. Investment clubs certainly have their place, but they’re not the best place to get started in real estate investing.
3. Attend trainings.
Getting into a comprehensive real estate investor training program is the biggest step, and probably one of the best steps, you can take toward building your career as a real estate investor. A good program will teach you how to evaluate a property and choose an exit strategy, estimate repairs, and predict your potential returns. It should also teach you how to find leads on undervalued properties, approach distressed homeowners, make offers, and negotiate deals. Some of the better training programs will even provide instruction related to branding and marketing techniques so that you can create a presence in the marketplace that drives motivated sellers to you. Of course, you can piecemeal your training together by attending classes here and there, like those offered by investment clubs. But, if you can get into a comprehensive training program you’ll be able to get out there investing much faster—and with a better chance of success.
Not all training programs are created equal, however, and there are dangers to signing on with a low-quality one. If the courses are taught by investors who haven’t been in the business long or who aren’t that successful, for example, you could get stuck with bad investing habits that stall, instead of support, your career. You might even learn the kind of unethical tactics that give a handful of real estate investors a bad name. So do your research and select one that’s worth your money, time, and good name—and that has the potential to pay off by making you an investing expert.
4. Hire a mentor.
Some new investors choose to bypass classes and training programs and, instead, hire a real estate investing mentor to fast track their career. The benefit of having a mentor is that they may teach you the ropes of investing in real estate and help you navigate issues that can arise with individual transactions. They may even be able to help you play up your strengths and improve upon your weaknesses. So, if you’re great with numbers, but struggle with negotiating, a mentor can shape their instruction to suit your specific needs. Even with solid training behind you, having access to one-on-one mentoring can help you step up your game—especially when you’re dealing with sticky situations you’ve never encountered before.
The trick, however, is to find a mentor who’s as interested in your success as they are in making a buck. With so many self-professed “gurus” out there, that’s tough to do. And, hiring a mentor can cost thousands of dollars. When you’ve just started flipping houses, you don’t always have a lot of extra cash lying around. If you do, you probably should use it to invest in real estate.
5. Open a franchise.
One of the best ways to get started in investing is to open a real estate investing franchise, like those offered by HomeVestors®. You get comprehensive training, access to a network of other franchisees, and one-on-one mentoring. Additionally, you’re set up with an established set of business practices, a recognizable brand, and marketing tools for investors that are usually too expensive and time-consuming to create and implement on your own. And, you still get to reap all the best benefits of being your own boss. In terms of getting started in real estate investing, in my opinion, there’s no better way to jump right in.
Get it Right the First Time Out
Honestly, I think I’m pretty lucky. I had everything I needed to get started in real estate investing from the moment I made my decision to begin my new career. I’d watched a couple of other investors try their hands after attending a few classes, only to get tied up trying to save a house that turned into a money pit. I also watched a friend of mine spend thousands of dollars on a fancy mentor who took his money and gave him empty promises in return.
Wanting to avoid their mistakes and get my new investing career on the right track the first time out, I decided to become an independently owned and operated HomeVestors® franchisee. I got some of the best real estate investing training in the industry, one-on-one mentoring with a Development Agent, and the tools and resources necessary to make my first deal and help establish a long career. How did I decide to join the HomeVestors team? As luck would have it, by having a beer with another HomeVestors® franchisee.
It’s lucky for Phil that we had a chance to talk before he made any unfortunate decisions. Now, in my opinion, he’s found the best way to get started in real estate investing, and I expect it won’t be long before he’s having a beer with someone else who needs advice.
Make the decision to get started on the right track in real estate investing, contact HomeVestors today!