Things You'll Need:
- Training/education in Real Estate
- Start-up capital
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Step 1
Educate yourself on real estate strategies. Read books and online articles about the different ways you can invest in property. There are many ways you can invest such as wholesaling, flipping, and landlording. Find an investment strategy that best fits your short-term and long-term plan, and one that works with your risk tolerance and budget.
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Step 2
Build a local team and find resources. Make contacts and network with real estate professionals and investors who can help you find or execute deals. Regardless of the type of real estate investing you do, local professionals are a valuable source for leads, contacts, and information. Your contacts may include realtors and investors to help you find deals, as well as mortgage brokers and private lenders to help you finance them.
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Step 3
Learn your market. Real estate is all about the location. Focus on one town that you’ll become the expert in, and concentrate your efforts on finding deals in that area. Research the current market values, appreciation rates, and other information about the town. The more you know about the neighborhoods and current values, the more you can spot a great deal and act immediately. You can search online for recent sales prices of properties in the neighborhood or ask your real estate broker to help you get these comparables.
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Step 4
Find deals by locating motivated sellers. Through marketing, networking, and actively searching, you can get the best deals by finding sellers who are motivated to sell quickly. Set up a marketing system to bring in leads on a regular basis for potential deals.
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Step 5
Evaluate the deal and negotiate with the seller or agent. You would do some initial calculations to determine if a deal is worth pursuing when considering all expenses, taxes, and fees. If potentially profitable, try to negotiate a better deal.
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Step 6
Consummate the deal by getting a signed contract. As an investor, whenever possible you should provide your own contract (instead of a standard contract) with terms that are favorable to you as the buyer or assignor/flipper. Consult a real estate attorney and carefully consider and understand all of the contract terms before signing.
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Step 7
Complete your due diligence. As an investor, you must check your numbers carefully. You cannot accept the expense numbers given to you by the seller or broker. You must do your own research to confirm all expenses and fees. This includes having a professional inspector check the property for repairs and checking all the mortgage, tax, and closing costs. If you get new information about costs or rental values that will affect the deal’s profitability and risk, then you need to renegotiate the deal or walk away.
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Step 8
Do the pre-closing walkthough and close on the property or assign your contract if you’re wholesaling.
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Step 9
Depending on your strategy, you may renovate or make cosmetic repairs, then rent it out and/or resell the property. If you are planning to be a landlord or resell the property, you can reduce your risk and offset expenses by getting a qualified renter as soon as possible to generate cash flow. Ideally, you’ll make more each month in rent than the mortgage and expenses, so you’d have some income left over each month. If you are flipping the property, get it renovated and sold as soon as possible to reduce your monthly expenses and to maximize profit. To build a real estate empire, continue to reinvest your profits and leverage your assets to buy more discounted properties.
