How to Become a Real Estate Investor

by Allen Young ; Updated July 27, 2017
Investing In Real Estate

Becoming a real estate investor can be very profitable and a vehicle for creating long term wealth. Investing in real estate gives the investor many benefits that other investments cannot. You can benefit from investing in real estate by receiving income, capital appreciation and tax benefits. However, you must know what you are doing to avoid costly mistakes.

Step 1

Understand the fundamentals of estate investing. Real estate investing covers a wide range of areas. Before you decide to specialize in one area of real estate investing you need to understand the basics of real estate. Read as many books on real estate investing as you can. Ask an experienced investor for book recommendations. Take a course on real estate at a local community college to understand the basic concepts of investing in real estate. You may also want to join a local real estate investing club to learn and network from more experienced investors.

Step 2

Get your personal finances in order. One of the benefits of investing in real estate is leverage. By using leverage and other people's money you can invest in a large property and even cash flow. However in order to be able to borrow money at the best rates your personal finances must be in order. Pay down as much debt as possible before applying for loans. Also pay your bills on time in order to have as high of a credit score as you can. Often getting the best interest rates is the difference between a profitable deal or one that is losing you money each month.

Step 3

Decide on the type of real estate investing you want to specialize in. There are many ways to invest in real estate. You should find one that matches your goals and skills. You many want to buy and rehab homes quickly for a profit if you have the physical skills and desire to do so. Or you may want steady income and tax benefits without actively managing your properties. Investing in apartment buildings may be the real estate investment for you.

Step 4

Study the market you are interested in investing in before you invest. Spend time looking at the local area and many properties before making an offer. You want to have a good knowledge of the area and properties to be able to know what a fair price is for any property.

Step 5

Seek partners. If you are short on cash or experience taking on a partner may be an option. A partner can help contribute cash, skills or experience to the deal. Just make sure you have a good partnership agreement in place and that the partner is someone you can work with.

Tips

  • If you are starting out in real estate investing and don't have a lot of money consider bird dogging. Bird dogging means you find the deals and assign the deals to another investor for an assignment fee. Real estate investors are always looking for profitable deals and you can start bird dogging to raise money for your own deals later.

Warnings

  • Beware of real estate get rich courses and gurus. You can find a lot of free or inexpensive information on real estate investing by getting books at the library or taking a course at a local community college. Many get rich courses are all hype and may be outdated or not effective in your area. There are no magic get rich technique to succeeding in real estate, just hard work.

About the Author

Allen Young is an experienced writer on such subjects such as real estate investing, mortgages, and personal finance. Young has also written on sports, travel, and parenting. Currently he is the president of Crestwood Capital Group.

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