10 Steps To Becoming A Real Estate Investor

A 10 Step Guide To Becoming A Real Estate Investor

Want to get into real estate investing, but you're not quite sure where to start? Here's a step-by-step guide!

Step 1: Determine Your Purpose

Why do you want to invest in real estate? Is your goal to generate passive income, or do you want to make a lot of money quickly? What's the endgame?

As an experienced investor, a word of advice; although the "got rich quick" stories tend to be retold the most in the real estate investing world, they're few and far between. Don't let your career goal be to "get rich quick". 

Before you finalize any big-time decisions, always evaluate your lifestyle, and if you need to make adjustments based on your current income first. Do you have enough to invest in something like quality software for lead generation?

If you you want to be someone who "flips", do some digging to see if have the means- the time, money, resources - to renovate houses for a return on investment.

Usually successful investors finish flips in under six months, so working efficiently is key.

Step 2: Get Your Money Right

Before you invest in real estate, make sure you will have enough money to cover all the costs associated with it. If you're planning on renting out your property, remember that there are other ongoing expenses. Mortgage payments (if applicable), utilities, upkeep, repairs, taxes and insurance to name a few. 

In the worst case scenario, if nobody rents from you - will your finances be able to cover this?

Step 3: Financing Pre-Approval

If you want to buy a rental property, getting prequalified for a mortgage is an absolute must. Getting pre-qualified doesn't mean you’re automatically approved for a loan, but it's a helpful step that gives you insight into what your next steps should be.

For example, if your debt-to-income ratio is too high, you'll probably need to work on paying down debts before continuing with purchase plans.

And remember - you don't need all of your downpayment in reserves. But by getting pre-qualified, you can understand where you stand and how long it will take until you're able to purchase an investment property.

Step 4: Keep Money In The Bank

Even those with a pre-qualification may need extra money in savings for things like unanticipated costs or being able to pay the bills if tenants move out.

Make sure you have the reserves necessary to weather any financial storms or economic downturns in your own life. A general rule of thumb is to make sure you have 12 months of reserve funds that, even if everything with your investment property goes sideways, you can still cover your expenses for the next 12 months.

Step 5: Determine Short Vs. Medium Vs. Longterm Strategy

Before making any big-time purchases, you need to make sure you have a well thought-out investment strategy. For example, are you going to turn this property into a short-term lease? Is it more of a, "buy and hold" situation?

Your response affects what actions you take as an investor. If you're going to flip the home, the longterm area outlooks isn't as important. But what if you're looking to buy and hold? Then making sure the area you're investing in will grow is key.

Using a real estate comp tool is a great way to determine property values, and to see whether those values are going up or down.

Step 6: Identify Your Blind Spots & Supplement

Building a team is key to taking your real estate business to the next level; it's not something you can knock out on your own. Sure, you may have a law or contractor background; but make sure to bring in experts that can help you shore up any blindspots before buying.

Step 7: It's Time To Look For Your Home!

Looking for investment properties requires A LOT of time. But lucky for you - Leadflow's tools, like real estate lead generation software, cut that time down substantially and make finding an investment property is quick and easy - no matter where the property is located!

This frees you up to explore burgeoning markets that may be a little bit outside your immediate geography.

Step 8: Do Your Due Dilligence And Read The Fine Print

Before you make an offer on a property; DO. YOUR. RESEARCH. Find out the home value using a comp tool and consult with a professional inspector to get a better idea on the property's AVR. Get estimates from contractors for any necessary repairs. Also examine the financials, including cash flow, return on investment and net operating income forecast situations.

DON'T SKIMP ON THIS PROCESS. One of the biggest mistakes real estate investors make is not paying a home inspector before purchasing a home.

Step 9: Time To Put In Your Offer

If you've decided that the property is a wise investment, go ahead and make an offer. The process for making an offer on a house (or any other type of purchase agreement) is uniform whether you're planning to buy outright or not.

Your proposal will include both a financial offer as well as any conditions attached to the sale; for example, if you want the ability to back out of the sale if necessary based on an appraisal or inspection contingency, be sure to include that condition in your initial offer.

Step 10: Buy!

Your research is complete and all the paperwork has been filed. Now it's time to buy your home! To do this, you'll need to work with the title company handling the sale and make sure all final requirements are met. Sign the papers and pop that champagne. And then?

Get to work!

Software investing is about arming yourself with the right tools and knowledge to give yourself the unfair advantage. And that's where Leadflow comes in. We're industry-leading lead generation and marketing software that is built to help real estate investors find better and bigger deals.

Want to see what Leadflow is all about? Grab a 7-day free trial below!