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By Mary Aspen Richardson
Investing in real estate can be lucrative but also challenging. It doesn’t always require a vast financial investment, opportunities are numerous, and it helps you create an extra income stream. If you’re successful, investing can become your primary source of income! Sounds great. However, it does require some know-how and effort on your part. Also, you need to be financially stable and invest some money and time. Having the right experts on your side is also valuable. In addition, you need to ask yourself whether this is something you can and want to do. Not everyone is cut out for a landlord – you need to be a good judge of character and have excellent people skills. Of course, if you’re determined, you can learn anything. So, how do you know? Here are the seven signs that you’re ready to become a real estate investor!
#1 Financia
l stability is the first step
To become a real estate investor, you don’t need an excellent credit score or to be a millionaire. On the contrary, with the right mindset, you can start investing with only $500! However, this line of work involves some risks too, so it’s best to be well-prepared. Firstly, you need to assess your finances realistically. This is especially important if you have no experience at all. And, if you are doing well and have a few dollars to spare, real estate investment can be a great option. You can start small with one property (while keeping your regular job) and expand your business from there.
#2 You have clear goals
Of course, you need to have a plan, so consider your goals. Do you want to create additional passive income? Or do you want to become a full-time investor and retire early? Also,consider what kind of investments you want to make. You might choose to flip properties – buy cheap, upgrade, and sell for more. On the other hand, you might prefer long-term investments and decide to purchase properties to rent. If the latter is your choice, there are still a few more things to choose from:
- renting to tenants or investing in commercial properties;
- buying close at home or searching for suitable opportunities further away;
- hands-on approach or hiring a property management company.
Having answers to all these questions will determine how much money you need and the level of responsibility, time, and effort you need.
#3 You’re willing to do your research
Whichever route you take, you still need to do proper research. Becoming an expert real estate investor requires learning the ropes of the trade and knowing what to look for. Buying an investment property is quite different from purchasing a residential one. For example, you can find a lovely house in a location that appeals to you. But still, it might be a poor investment choice. Why? Well, here are some things you must factor in and know inside out:
- growth potential
- overall demand
- possibility of capital gains
- ROI (return on the investment) of the property
- demographic trends
- location’s potential – amenities, upcoming developments, etc.
#4 You have the right team on your side
Next, for every business, building a network and nurturing valuable connections is essential. In real estate, having a few professionals on your team will make a huge difference. For example, a great lender will ensure your finances are in good order, and you have a clear picture of where you stand. Also, an experienced and trustworthy real estate agent is a must.
But, there are a few more experts whose service you need: an accountant, insurance broker, maintenance people, and maybe even contractors and cleaners. And if you’re planning a long-distance relocation, ensure the right experts are at your disposal. Whether you want to recommend the best movers to your tenants or move closer to your investment property, having reliable experts on your side will ensure everything goes smoothly and stress-free.
#5 You must understand the role of the landlord to become a real estate investor
Of course, even if you checked all the items on this list, it doesn’t mean you’re ready to start investing. The crucial question is: Are you ready to take on all the responsibilities of the landlord? Being your own boss is satisfying but also challenging. You will be responsible for many things: from purchasing and maintaining the property to screening tenants and communicating with them. It’s a lot, but real estate investing is the right choice if you are ready to deal with that.
#6 A good investor understands both benefits and risks involved
Newbie investors have many lessons to learn. However, the first is that you must put your emotions aside and be realistic and objective. There are many benefits of investing in real estate. You create a valuable passive income, and there are tax benefits as well as the advantages of being independent and managing your own time, work, and resources. The list goes on!
However, you must be able to assess the risks realistically and be ready for market fluctuations. There’s no guaranteed salary, and your income will depend on wise choices and informed decisions.
#7 You love what you do
Lastly, even if the financial aspects sound more than appealing, be honest with yourself. Do you see yourself doing everything we’ve mentioned above in the years to come? Is it something you’ll love and enjoy and have fun doing? If the answer is yes and yes, do it! Taking that first step is the hardest part, but everything becomes more manageable if you love what you do and have intrinsic motivation. This is especially important if you plan to be an investor full-time and build a career.
Final thoughts
Being an investor is an exciting and satisfying job. It has many benefits and can help you make your dreams come true sooner than expected. However, there are also challenges and obstacles along the way. So, if you want to become a real estate investor, ensure you’re ready and dedicated to achieving your goals.
