Rental Property Investing for Beginners
Let’s face it. Most of us work a full time job that we have no intention of leaving. I’ve been to dozens of seminars (on my own time of course!) and have read nearly every book in the “Real Estate” investing section of my bookstore. Nearly every speaker and author I’ve met makes a full time living of being a professional investor. I have a tremendous amount of respect for most of them. I consider them extremely talented and maybe a little lucky. But for most of us, we just want to own a few good, cash-flowing properties. I’m one of those people who actually enjoy the career I’ve chosen. I work for a great company and like what I do. But I also really like real investing. Real estate investing for me has become a hobby that I greatly enjoy that started out as a mere curiosity. But real estate investing is not easy. The best evidence of that is documented by all the investment properties lost in foreclosure by novice (and even experienced) investors who had no clear business plan, no clear idea on what drives the real estate market and no idea on how to pay for their investments. Even today, many investors are finding themselves in deals that may not work to their benefit. Many investors prior to 2010 even started upside down from the moment they purchased their investment. And before you ask, yes, there were lenders lending their money on investment properties that could not possibly cash flow at the agreed price, loan payments and rental rates. It’s tough to believe but it’s true.
I plan on writing several articles that can linked together to help you form your own game plan for investing. I’m going to focus on the “lazy man’s” way of real estate investing so you don’t cut into your work time and help minimize cutting into your family time. I’ll focus on just a few basics in this article. But by the time you’ve all the articles, you will have enough confidence to “pull the trigger” and purchase your own investment property. So to keep things simple, let’s start with focusing on what you can do right now to get started.
The first thing you do: Find a real estate investing club in your area. Every area in the country has a real estate investing club. If you want to swim like a shark, do you hang out with the clownfish? Of course not! The people that go to these events are serious about investing or serious about becoming investors. Most clubs meet in the evening after dinner. And every one of them has a similar interest. This is where you’ll find the knowledge you need to get started and to stay motivated. You’ll meet newbies that have no experience (just like you!), short term flippers, long term rental property buyers, wholesalers, real estate agents, real estate vendors like mortgage brokers, insurance brokers, hard money lenders, appraisers, private money lenders, attorneys and more. The point is that you need to immerse yourself with these people. Gain as much valuable information as possible over the next few weeks, months or years. Learn who knows their stuff and who to stay away from. Surround yourself with the successful. Make friends with these people and speak to them one-on-one about your goals. Define your interest in real estate investing. You’ll learn if you would prefer to flip houses or buy long term rentals. Maybe you want to wholesale or become a private money lender. Maybe you want to do it all. It’s ultimately your call. Come as many times as you can, time permitting of course. Bring a notebook and take notes.
For my real estate investing, I only do long term rental acquisition. So for all the articles I write, this is where I will focus my effort. If long term rentals aren’t your thing, you may still find some value in some of the ancillary techniques that may apply to other areas outside of long term rentals.
So your first steps:
- Find the closest real estate investing club in your area. The way to do that is just type “real estate investing club in (your city or town)” into a search engine and see what pops up.
- Commit yourself to attend as many meetings as you can
- Start defining what your interest is in real estate, ie long term rentals, flipping, wholesaling, lending, etc
- Find the experts in the investing club and become their best friend
- If you’re buying long term rentals, find a real estate agent that invests too. Don’t waste your time with real estate agents who only know how to “find your dream home”. Agents who don’t invest have no clue what you are doing and may accidentally set you up for a catastrophic purchase. Only work with agents that walk the walk.
- If you have a spouse, get them on board with you. If you don’t, you’re going to have a rough road ahead of you.
- Repeat steps 1-6
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