COVID-19 has left many people’s careers in flux. It’s a less than ideal time to start a business, at least in most industries. One exception, however, might be the real estate investment industry.
That’s because the recent stimulus plan has helped drive mortgage rates down, creating the ideal buyer’s market. This forms the perfect environment for real estate investment. That doesn’t mean getting started will be easy, though.
If you’re a new real estate investor, these four tips can help ensure that you’re ready for anything your investing throws your way. From marketing your properties to finding tenants and managing daily operations, knowing the field can help you succeed.
Define Your Role in Real Estate Investment
One mistake that many new real estate investors make is attempting to be everything: agent, owner, manager. That’s unrealistic, though. You need to find your focus within the field.
This is true even if you want to operate a business that includes all of these things. For example, if you want to be a real estate agent, you’ll want to focus your attention there. New agents must get licenses in place and build a niche.
Also, you must learn the area you intend to work in. There’s a big difference between an agent who specializes in apartment buildings or commercial space and one who specializes in historic homes. Similarly, the client base for each is significantly different.
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Once you’re clear on what your role within the real estate investment space is, then it’s time to cover the rest of your bases by hiring professionals. For example, if you have more of a back-of-house personality you might want to hire a property manager. Property managers work with tenants, deal with rent collection, and manage maintenance.
Or, if you’re better at interfacing with buyers and tenants, consider having someone to handle the back end of the business. They provide support for things like placing advertisements and maintaining the books. It doesn’t matter where you excel, as long as you have experts in the other roles who can support you. This ensures that your real estate investment is the most profitable for your time.
Real Estate Investment Key: Diversify Your Strategy
Early on in your real estate investment career, as you’re making sense of the many different approaches to the field, you might try to focus on one area. Superficially, this makes sense. After all, you can only learn so much at once, right? Not exactly. The fact is that because you don’t have a successful, financially secure business yet, now is precisely the time to diversify your investments.
You might consider finding a few turnkey properties to rent out, look for other properties to flip, and consider bolstering your finances by investing in REITs. Real estate investment is a big field. Just because you think you want to pursue one area, that doesn’t mean it’s the right fit. So Give yourself some permission to experiment until you find your niche.
When real estate investment professionals talk about partnerships, they’re often focused on financial partnerships. This is an expensive industry, and it can be tough to break into it alone.
A financial partnership is not the only type of partnership you can benefit from, though. In fact, it can help drive your business to think about your property manager as a partner, for example, or any contractors that you regularly work with. Over time, strong relationships across a variety of fields are what will allow your investment project to thrive.
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Real estate investment is a rapidly evolving industry right now, with online lenders and technological solutions pushing into the space. New marketing tools make it easier to promote properties, and living arrangements are changing.
While traditional wisdom may help you understand the scope of the field, you’ll need to be nimble to adapt to keep up with each new innovation. Being a real estate investor is more than just owning property. Are you ready to strike out on your own?