Steps to Real Estate Investment

The largest investment that most people will make is purchasing their own home. Once you are a home owner, you may realize that real estate can be very profitable and decide to become "An Investor". Before you make a commitment to such a title, consider these 3.3 steps:

1. Realistically look at your finances
If you are carrying your mortgage and paying your bills but don't have money left over, then you should probably work on reducing debt or increasing income before pursuing investment in real estate. 100% Investor Loans are non-existent. In most cases, a minimum of 10% down payment is needed to purchase a property as a investor. Make sure you have the financial capability to purchase property and carry both mortgages for at least 6 months without renting the property out.

2. Define Your Desired Outcome and Strategy
The goals you set for investment will determine how and what you do. This step is one to be taken seriously. "I want to get rich" or "I want to be an investor" are not true goals and aren't very good motivators either. A goal should be Definite and Do-Able. It should have a purpose and be realistic. Once you've set your realistic goal, you must go about figuring out how you plan to reach your goal. Do you want to purchase pre-sales in new construction? Do you want to purchase distressed properties and fix them up? Do you want to buy properties and hold them as rentals? Your strategy should be guided by a realistic picture of your life, skills, and risk tolerance. If you have never fixed up a home, then purchasing distressed properties might not fit your skills very well. Be realistic!!!

3. Pick and Learn Your Market
Once you know what you want to do and how you want to do it, you must decide where you are going to do it. Are you going to purchase in Charlotte, Miami, or Biloxi? Where are you going to focus your energy and your money? What market conditions are going to affect your property value in 1, 2, or 3 years from now? Is the market expanding or contracting? You must learn where things are happening and why they are too. You need to know rental rates, available properties, sales histories, and neighborhood dynamics. You need to know population growth and supply levels. This is the step where the rubber hits the road. This is where you will either be successful and wealthy, or be poor and fail.

3.3 Get to Know People Who Do It
Talking to people who have done what you want to do will give you a better picture of what you are getting yourself into. Although remember to, "Ignore Idiots and Zealots (gitomer)". Always try to have a mentor or a trusted advisor that you can bounce ideas and potential deals off of--someone who has your best interest in mind. It is important that the person you seek counsel from to be experienced and unbiased.