As a beginner in real estate investing, it can be overwhelming to get started, especially if you have zero experience in business and investment strategies. Most real estate newcomer investors do the only thing they know at the time; learn as much as they can from seminars, mentors, books, and blogs. But did you know that learning too much isn’t always the ideal answer, at least at first? Why? Ironically, too much knowledge might lead to analysis paralysis.
So, the secret to successful real estate investing is to start with a step-by-step plan from an already experienced real estate investor or company like cadre real estate investing. This insightful article highlights the three things you should ask yourself as a beginner real estate investor.
What is my Financial Stage?
Think about your overall financial picture before you even think of sinking your teeth into the real estate vitals. It’s expected that most real estate investors want to reach a financial independence level ultimately. After all, what’s the point of real estate investing, if not returns? Now think of financial independence as the mountain peak where income from investments covers all your living expenses. To reach the mountain peak faster means increasing your savings rate that you will later invest in real estate. At this point, it would be best for you to identify your position in the financial mountain; at the bottom, like most beginners, halfway up or near the top.
Why is it important to identify your financial stage? Certain real estate investing strategies will make more sense than others, depending on your position in the financial mountain.
What is my Specific Real Estate Investing Strategy?
While you could create a 30-page business plan at this point, don’t forget the ultimate goal is to get started. A big, detailed plan can be good for you later. For now, it would be best if you focus on choosing one real estate strategy that can help you move up the financial mountain. Beginning with a specific real estate investing strategy doesn’t mean you will not experience detours along the way or even have a complete direction change. You have to adjust to life’s unpredictability. Starting with one aims to help you focus and then give you the confidence to start. So, depending on your wealth stage, you can choose from either of the below suggested real estate strategies;
- Stability and survival for wealth states 1 and 2.
- Saver for wealth stage 3.
- Growth for wealth stage 4.
- Income for wealth stage 5.
What is my Target Market?
Today, prices are high in many good real estate locations, and new investors often wonder if they should invest near their homes or select a new market. Figuring out your real estate target market is helpful as your market of choice can make an enormous difference in your ultimate outcomes. If possible, it is advisable to invest close to your residence as doing local offers you the upper hand in the market’s intimate knowledge. While you can still manage your real estate from a long distance, it is more effective and efficient to be local. Begin by evaluating markets close to where you live and if prices are too high in your home neighborhoods, explore several ideas locally before considering other locations.
On the last question, whether you invest close to home or somewhere else, always remember to perform a market analysis first. Other critical questions to ask yourself as a beginner real estate investor include;
- What are my Investment Property Criteria?
- What is my team?
- How will I raise cash for my reserves and down payment?
- Do I have a plan to find deals?