Real estate investing 101: A comprehensive starter guide for 2024

Investing in real estate is one of the best ways to build wealth. Think of Donald Bren, the wealthiest real estate mogul in the world, with a net worth of $18 billion.

Think that’s far-fetched? Not if you know what you’re doing. If you’re a beginner, real estate investing may appear intimidating, but it doesn’t have to be. Like Bren, you can also grow your money, but you have to start somewhere.

On average, real estate investors earn around $70,000 to $124,000 annually. But first, you have to learn the basics.

1) Set your real estate investment goals

To begin, define your investment goals and strategies. How much and what type of income would you like to see from your investments? Your goals must be clear and measurable.

Think about how much risk you’re willing to take, what type of property you want to invest in, and how much time you can commit to managing your real estate investments. The goals you define will shape your investing decisions and strategies.

2) Do your research

You must educate yourself on real estate investing and market trends, too. Don’t go in blindly – you have to do your research.

You need to have a clear grasp of the real estate market and the current economic situation, what properties are available, and what the potential investment risks are. You should also be familiar with other expenses and obligations related to real estate investing, including taxes, insurance, and local laws.

According to Ryan Zomorodi, Co-Founder and COO of RealEstateSkills.com:

“Getting the lowdown before diving into real estate investing is a game-changer. Seriously, it’s not just about power; it’s about securing that success bag.

“Real estate is a wild ride, and knowing the market trends, financial tricks, and legal ins and outs can be the difference between a high-five and a facepalm. Staying in the know is the secret sauce to making smart moves, avoiding pitfalls, and raking in those returns in the ever-changing real estate game.”

3) Network with professionals

One of the best ways to learn about real estate investing is through those who have actual experience in it.

It’s good to consult a real estate expert or mentor who can guide you through your first steps. It’s also important to start building your network of real estate professionals, including agents, attorneys, and contractors.

You can learn from their experiences and expertise, and you can also benefit from the other services they offer.

4) Secure financing options

Prepare the money you’ll need to fund your investments. While you can start investing with little to no money, there are real estate investment options that require a significant amount.

You may need to secure traditional mortgages or take out private loans. Other financing options include hard money loans and home equity loans.

Jim Pendergast, Senior Vice President at altLINE Sobanco explains:

“You must nail down your financing options early on because securing the right financing sets the tone for your entire investment journey.

“Whether it’s traditional loans, private lenders, or alternative financing, securing your funding empowers you to capitalize on opportunities and navigate the market with confidence. Don’t let financing be an afterthought – make it a priority from the get-go, and you’ll be in the game to win.”

5) Conduct due diligence on properties

As you research, you might find properties you’d like to invest in. You must conduct thorough due diligence on those potential properties.

When assessing a potential property for investment, there are several factors you should consider. Some of the most important ones include the location of the property, its condition, its cash flow and appreciation potential, zoning regulations, and taxes.

Doing so can help you make an informed decision about whether a potential property is a good investment opportunity.

6) Consider REITs or Mutual Funds

Real estate investing isn’t boxed in just physical properties. You should also consider investing in real estate investment trusts (REITs) or real estate mutual funds (REITs/Mutual Funds).

With REITs and Mutual Funds, you can earn through dividends and capital appreciation. You also have the benefits of liquidity and know that professionals manage the trusts and funds.

These can offer you diversified exposure to real estate minus the hassle of actually owning and managing physical properties.

7) Partner with experienced investors

While you are yet to gain confidence in investing, you may want to consider partnering with experienced investors or joining a real estate investment group. Doing so can provide you with valuable guidance and support.

Likewise, you’re exposed to opportunities to learn from those who have more experience with real estate investing. This will reduce your risks (like bankruptcy) and increase your chances of success.

8) Start small

As the old adage says, the best way to travel a mile is to take the first step. Don’t feel intimidated or doubt your ability to invest in real estate. You can start small and gradually expand your portfolio as you gain experience and confidence.

Stephan Baldwin, Founder of Assisted Living, advises:

“Don’t let being a rookie hold you back! Starting small is actually a super-smart move. It’s like dipping your toes in the pool before attempting a cannonball.

“Take it from me; I’ve seen folks score big by kicking off with modest investments. It’s not about the size; it’s about the strategy. Starting small lets you learn the ropes without risking it all. So, don’t hesitate – jump in, make those initial moves, and watch your real estate journey unfold. Remember, every big shot was once a beginner, too!”

Real estate investing takes effort, time, and patience

Real estate investing is a great way to build wealth, but it requires effort, time, and patience. You must set your goals, do your research, network with professionals, secure financing options, conduct due diligence on properties, consider REITs or mutual funds, partner with experienced investors, and start small.

When you follow these steps, you can make informed decisions and achieve financial success. You can build a solid real estate investment portfolio. Remember, the key to success in real estate investing is to remain committed and consistent in your investment strategies. Good luck on your real estate investing journey!