How to Become an Independent Real Estate Investor

Real estate investors work with either commercial property, residential property or both.

Independent real estate investors make their money purchasing property and either reselling it or renting it to tenants. Real estate investors work with either commercial property, residential property, or both. One must have an interest in real estate and some financial savvy to make a profit in real estate investing. With good credit and some start up money for your business, you can become an independent real estate investor.

Things You'll Need

• Good credit
• business plan

Instructions

How to Become an Independent Real Estate Investor

1. Study commercial or residential real estate sales, whichever is your preference. The more knowledgeable you have about the real estate sales transaction process, the more comfortable you will feel when it comes time to shop for a property. Also, study the real estate market in your desired area. Be informed of the price range of the type of property you're interested in to help determine when it will be financially feasible for you to start your business.

2. Decide how much of your money you're willing to put into your real estate business as a down payment. Write out your business plan. Talk with a loan officer to find how much money the bank or mortgage company is willing to lend you for a down payment. You may be required to put 20 percent down on the purchase, according to personal finance experts from The Boston Globe.

3. Save for a down payment if you haven't already. Put aside at least five percent of the value of the property in an emergency fund, according to Jeffrey Taylor, a Virginia rental property owner and author. This is also the time to make sure that your credit is high enough for a mortgage loan. When you have your down payment saved, apply for a loan preapproval. Having a preapproval letter in hand will show property sellers that you are serious about purchasing a property for investment purposes.

4. Enlist the help of a real estate agent. Choose a real estate agent who is knowledgeable about either residential or commercial property in the area you'd like to invest. Have the real estate agent send you a list of properties that might interest you. Look at these properties in person. Assess each property's pros and cons and how much it will cost to bring the building in good condition for renting or resale.

5. Make an offer on your desired property and complete the sales transaction. Hire contractors to do any needed repair work to the property or do it yourself. If you plan to flip the property, hire a real estate agent to list the property for sale. If you plan to use the property as a rental, list the property on your own or with the help of a property manager.

References

• The Boston Globe: How much do you need to put down to buy an investment property?
• Mr. Landlord: Rental Emergency Fund Calculator