A lot of money has been made by those who invest in real estate. If you are a new investor thinking about jumping in then this article is for you--a straightforward three-step plan meant to help you get started investing.
1) Make a Decision
Foremost; you must decide that you will make a commitment to invest in real estate. Yes, real estate can and does provide financial success for the average person, but it's not all fun and games-getting started investing in property takes work. You must be willing to make an effort to learn the nuances over a several month period with a good attitude about learning and the resolve not to quit until you succeed.
2) Learn the Basics
A wealth of information is available for you on real estate investing. There are books, seminars, and now, thanks to the web, a ton of online resources. The cost will be minimal, and in many cases, many resources are free. So your education isn't going to cost you an arm and a leg but to be successful you need to invest the time and money to learn.
Start by learning the basics. Learn how properties are valued, how title is transferred, what title insurance is, as well as other general real estate terms and concepts. There are glossaries available online. Then expand your education by learning the terms and concepts associated with real estate investing such as cap rate, gross rent multiplier, operating expenses, net operating income, cash flow, and so on. Learn what an APOD is and how to read a Proforma Income Statement. Learn the formulas. Again, there are numerous articles online to educate you.
Next, learn about financing. Did you know, for instance, that multifamily properties consisting of four or less units are financed by a "residential" loan whereas multifamily properties of five or more units are financed as a "commercial" loan, and the terms and conditions of each loan category vary significantly? Plan to meet with a lender or a real estate professional to discuss these types of loans as well as some creative financing techniques such as lease-options.
Third, you need to learn how to find and evaluate rental property. The surest way is with the help of a professional understands investment property and real estate investment software. Whereas the professional can help you to locate rental property, a good investment software solution can help you evaluate the property's cash flows, rates of return and profitability as well as teach you-you will learn the investing nuances almost by default as you use the software to run the numbers.
3) You Must Get Started
Bear in mind that you will never know it all, so don't think that you must wait until you do. If you have been doing your homework, and have studied and learned, then get out there and start applying the investing information. You'll never enjoy the security and financial freedom real estate investing has to offer until you invest.