The reports are in: American millionaires still maintain that real estate is the best investment anyone can make.
The question is, how do you get started with real estate investments when you've never purchased or sold a property before?
Buying and selling real estate isn't as complicated or daunting as it may seem. The most important thing is that you have a solid plan for your property investment and a way to protect it before you dive in.
Real estate means real money and property means plentiful profits!
Read on to learn what you need to know before you start buying and selling real estate property profitably.
Understand Your Financial Stage
Everyone can benefit from investing in real estate, but that doesn't mean that everyone is currently in the proper financial stage to do so. There are five main financial stages we may go through: survival, stability, saving, growth, and income.
If you're in the survival or stability stage, now is not the time to invest in real estate. However, once you are able to start saving (you want to have an emergency savings fund and an unemployment savings fund that could cover your cost of living for six months), you may be ready. If you're in the growth phase, it's the perfect time to invest in real estate.
Choose a Real Estate Strategy
Your real estate strategy should cover the kinds of properties you want to buy, the team you want to build to manage your properties, and the financing you'll use to make these investments.
The simplest real estate strategy involves using your own savings and a traditional mortgage to purchase a starter home that you'll eventually flip. A more complex strategy could be purchasing a string of rental properties, hiring property management, and finding investors to help you grow your real estate investment into a business.
Research Your Target Market and Location
Make sure you know that your real estate strategy is viable. If you want to purchase rental properties, who do you expect to live there? Is there a demand for rental properties?
Make sure you know who your target market is and understand your regional property value before you dive in.
Prepare an Exit Strategy
Any investment or business endeavor requires an exit strategy. That means figuring out what you're going to do if you decide that it's time to get out of the real estate game.
Make sure you can answer questions like, "What will I do if I need to sell my house fast?" and "How will I recover if one of my properties drops in value?" It's just as important that you know how to back out of an investment in real estate as it is that you know how to get started.
Start Buying and Selling Real Estate the Right Way
Buying and selling real estate properties can be a very lucrative endeavor, as long as you do it the right way. Follow our steps to start investing in real estate and ensure that you're financially protected no matter what happens.
Looking for more ways to stretch your real estate investing? Take a look at the Real Estate section of the Frugal Finance Blog to learn more about how to succeed buying and selling real estate, property investing, home improvement, flipping houses, and much more. Now start pumping up those property profits!
