By Melissa Dorman, March 21, 2019
So many people wish they could be wealthy. Far fewer ever take any steps towards that aim. Real estate can be an excellent avenue towards building wealth. Speaking of wealth, check out this Klear Picture foreigners tax for an idea. It’s the “Get Rich Slow” game plan. As an investor the past few years, I can attest it takes hard work, lots of preparation and ongoing diligence to do well in real estate.
Till some time back, investing in real estate was considered difficult to access and to afford by most people.
But now the trend has started to change and people are more open to try various new avenues of investment including real estate.
Funding your real estate investments have only grown more diverse over time; people are not just using their own savings to buy homes, but they have started to look for other options like private equity funds, or even investing passively through a REIT(Real Estate Investment Trust).
Benefits of Real Estate Investing…
Real estate investment has turned out to be both a lucrative and a reliable way to generate substantial returns.
When approached correctly, real estate can create a consistent income stream for your future, through rental income.
It also provides your portfolio with such valuable and unique benefits like tax advantages, portfolio diversification and appreciation potential.
Basics of Real Estate Investing:
But for a beginner, the investment in real estate can be both doubt filled and intimidating. But by understanding and following some basic concepts and strategy, one can gain the confidence to start investing. These are some of the basic ideas that most successful real estate investors practice but the concept in not limited to these points alone.
These basics points to keep in mind before investing:
1) Make a Plan:
Like any other investment, real estate investments require a great degree of planning.
The beginner in real estate investing must approach the planning process as a serious activity. Think of it like going back to school for a degree. You must establish both short term and long-term goals for your wealth building.
Get clear on your various decisions like the type of home, preferred location, source of funding, term of investment, expected returns etc.
Only by proper planning can you make these decisions and implement them practically.
A proper plan allows investors to visualize the big picture. Visualization will help you maintain focus on the goals rather than on dwindling on minor setbacks (and they will happen).
Real estate investing can be both complicated and demanding, and a solid plan can keep you organized and focused on your big future goals.
2)Determination and Strong will
Deciding to invest in real estate is not something to do impulsively. It should neither be chosen merely because a neighbor has earned a small fortune from it, nor because it is the talk of the town.
It should be chosen only if you are really interested in this avenue. Moreover investing in real estate is a life long pursuit, and not a get-rich quick scheme.
As an investor, you may have to face many difficulties; you may need to learn things the hard way. You will make mistakes. You have to devote time; you will have to make many sacrifices; and you may even fail.
The successful investors are the ones who can take those experiences and turn them into lessons to improve their skills.
If you do not have a strong determination, even small losses feel like big failures. You don’t need to be an expert in real estate investing but your persistence is crucial. Celebrate those small victories and let them fuel your momentum.
3)Continuous Education and constant up gradation :
Like in any other business, one has to learn many things before starting to invest.
Apart from the investment basics, you must also be up to date with the laws, regulations, terminology and the latest trends in the real estate market.
Investors who are not up to date may make big mistakes. They may miss the correct timings of investing or end up investing in the wrong property. They may even have to face legal cases if laws are ignored or broken.
Successful real estate investors stay educated and adapt to any regulatory changes or economic trends.
You DO need to get proper education and do your Homework in this field. Surround yourself with experts and a community that keeps up to date on these matters.
4)Know the Market:
The market is a crucial part of the education and homework process. A beginner in real estate investing should acquire an adequate knowledge of their selected market. Pick a neighborhood and study what sells, the average home square feet, what homeowners and renters like and are willing to pay a premium for.
Knowing these details help you to predict and plan for the future. This enables you to predict when trends may change; thereby creating potential opportunities to benefit from those upcoming changes.
Once a particular market is mastered, the investor can move on to additional areas using the same in-depth approach. Don’t try to learn everything at once. Learn one way of investing really well and advance from there.
5)Identifying the Risks:
For other investment avenues like stocks or mutual funds, investors are advised with warnings regarding the potential risks involved in investing.
But in the real estate market, there are no awareness campaigns to educate and caution beginner real estate investors.
One can easily be misled by the sugar coated stories from those who are fraudulent. They (looking for easy targets) will lure you into believing that it is easy to make money in real estate.
But a knowledgeable real estate investors understand the risks. The risk can be both in terms of fraudulent real estate deals and also of any legal implications involved.
So they adjust their investments and dealings in such a way to reduce those risks. Vet anyone who asks you to give them money for education. How many deals are they doing? Who has used their program before? What was their result? Paying for education does not guarantee results, even though it feels like progress writing a big check to someone who is charming.
6) Great rewards demands great sacrifices:
What is your financial goal? How high is your dream? How bad do you want financial freedom?
If you want to use real estate investing to start living your dream life you have to sacrifice many things. Sacrifice may be in terms of many small enjoyments and privileges, to have a long term success in future.
You may need to forgo a vacation and use the money toward a down payment instead.
You may need to learn how to use a paint brush and do your own work.
Investing in real estate is the most rewarding thing you ever make but it will not always be easy.
Even after sacrifices it may happen that some of your dealings may not be as rewarding as expected. Change in customer buying patterns or implementation of new law may change your results
Expect several years of hard sacrifice in terms of time, money, privileges etc to get financially free and live your dream life.
As mentioned earlier, real estate investing is not a get quick rich scheme. It is a result of long years of persistent efforts and continuous education.
7) Building a strong network and team:
There is a famous saying in business “Your network equals your net worth”. This itself is enough to show the importance of Networking.
A network can provide important support and create opportunities for both new and experienced real estate investors.
A good network may comprise of business partners, clients, mentors or guides. This group can also consist of the best of real estate investors, in this way they will be both a challenge and support.
Those beginners in Real estate investing who are planning to have a long term presence must first establish the right team before they start their real estate endeavors.
Importance of team:
You may learn many things related to financing, law etc but ultimately you would want experts with real experience in your circle of influence.
There is always going to be someone that you have trusted to do a job. Don’t try to learn it all.
The task of building a strong network and team will help a new investor go a long way.
Who should be in your ideal team and network?
- A real estate agent
- A property manager
- A contractor or construction crew
- Maintenance people
- A good attorney
- An accountant
- A title company
One can also join local real estate associations; there one can find many people from related field. New investors may think it will not be feasible and costly to have the team of experts. But if they plan to have a long term and fruitful reward, having dedicated team can never be dismissed.
Conclusion
By proper planning along with strong determination, an investor can have a clear focus. Proper education and market study, helps make real estate investing more profitable.
Having a strong network and proper team are crucial steps to have rewarding real estate investing journey.
It may be simple task to earn short term profit, but developing a long-term real estate investing business requires skills, and efforts.
Melissa Dorman is a Licensed Broker with Yascha Group at Living Room Realty in Portland, OR. Follow Yascha Group on Facebook.
Melissa Dorman
Broker | OR & WA
She/They
Ten years ago, Melissa was living in a slum in Kolkata, India, helping over 200 women escape sex trafficking by providing alternative work at a social business.
It was there she discovered her passion for financial education as a means of empowering people to move out of poverty. After graduating from UCLA with a Masters, Melissa spent 5 years working as a Social Worker; assisting clients facing homelessness, in jail, or at a psychiatric facility.
As much as she loved the work, imagining saving for retirement on the meager salary of a social worker was becoming grim. That's when Melissa discovered "passive income." In no time, she fell in LOVE with real estate as a vehicle for wealth. Soon after, Melissa began locating off-market multi-family properties to purchase through creative financing strategies and win-win opportunities. Two years into investing, Melissa quit her day job as a Social Worker to become a full-time broker and investor. Initially, she was drawn to people in difficult circumstances, so she developed extensive experience assisting families facing foreclosure, short sales, and probate. Melissa is well versed in helping her clients overcome complex real estate challenges.
Currently, Melissa is teamed up with Super Broker, Yascha Noonberg at Living Room Realty. Together they assist clients to achieve their real estate dreams, including how to strategically buy and sell a personal residence to maximize profits. Far from the slums of Kolkata, her greatest passion now is empowering other working professionals to develop passive forms of income through buying multi-family properties in Portland.
Read More
- T: 503-567-4697
- melissa@livingroomre.com
