Getting Started: Real Estate Basics
By JD Esajian on August 11, 2014
Starting is never easy. This can be the case if you are changing careers, schools or getting started in a new business. In the world of real estate, starting out as an investor can be an intimidating proposition. Between the massive amount of terminology involved and the thought of waiting for your first deal to start making money there is pressure to know everything and act on it as quickly as possible. Many investors will wait until everything is perfectly in place before they start looking for deals. The reality is that nothing will ever be perfect. If you are just starting out, you need to get deals as quickly as possible.
A common mistake is trying to do everything at once or learn everything about the business in your first thirty days. Having the motivation to learn and succeed is necessary, but it may be counterproductive. The first thing you should realize is that the investing business is not easy. You will need to rely on the people around you in your first couple of deals. This means getting starting networking as quickly as possible. A good realtor and mortgage broker are the first two people you should contact. These will be the people that will tell you how much you can afford or where to find money for your deals. Without an idea of what you can afford, you will not have a great idea of where to look and what properties you can buy. Without a pre-approval, you will spend several weeks wasting time looking at properties you may not be able to buy.
Aside from financing, you should also network with local investors in your area. There is probably a local real estate investment association meeting within a short drive from where you live. In these meetings you can get real sense of what is going on in your market from local investors, attorneys, realtors and contractors. You may be able to close a deal or two by yourself, but what you will find is that your network and the contacts you make will be the backbone of your investing business. The more people you meet and work with over time, the more access you will have to future deals. Every new investor has to start somewhere and the first few meetings may be overwhelming, but they are a necessary part of your business development.
It is human nature to want to jump right into the business and take on as many deals as possible. The reality is while this can be exciting you may not be ready to handle them. Instead of spending money on marketing and direct mail you should start off with simple forms of advertising and see what you can handle. The first thing you should do is to get your investing website off the ground. This will be the basis for every other marketing you do presently and in the future. You should also focus on friends and family & social media. If the people closest to you don’t know you are an investor how is everyone else supposed to know. Start by sending a good old fashion letter to any coworkers, friends and family that you know telling them that you are now in the real estate investment business if they or anyone they know needs your services. This coupled with a few posts on social media or even a new Facebook page touting your investing services can further enhance your image. Doing these few steps alone should get your phone to ring and give you an idea of what you can expect in the business moving forward.
Dealing with some calls from friends and family does not mean you are in business yet. The next thing you should do is pick one specific area or price range for any deals and focus on those only. There are many ways to make money in real estate and many different types of properties. This can be overwhelming for seasoned investors and especially confusing if you are just starting out. By focusing on just one type of property in one area at one specific price you know what you are looking for and know what you want to do. This will also help in your relationship with your realtor by having them notify you of any new properties that fit your desired criteria. If you can save your realtor time they will be much more eager to work with you in the future.
Lastly, it is important to understand that what your goals and vision are for your business right now may not be the same in twelve months. Things change and new opportunities will come your way that can be quite different than what you imagine today. Knowing this you should be flexible and never rule anything out. This doesn’t mean you have to jump into every new opportunity that comes your way but you should take the time to explore them and see if they are for you.
Getting started in real estate is not hard, but it can be difficult if you take the wrong approach. The first year in the business can make or break your success. If you take small steps and start with the basics, you will be far more successful.