5 steps to get you started in real estate investing
There has been an increased interest in real estate investing in recent years. Some of the driving factors include stock markets underperforming expectations, a consistently growing real estate market, the popularity of real estate investing TV shows, just to name a few.
If you are considering investing in the real estate market, here are a few tips to get you started on the right track:
1. Feed your mind
Education will be your most important asset as you start your real estate investment portfolio. Investing without a good base of education is like sailing into the fog without a compass! There are many ways to educate yourself including hiring a coach, attending workshops and seminars, reading books, listening to podcasts and much more. To ‘get your feet wet’, I suggest picking up a couple of good books and subscribing to a few podcasts. Without having to invest a lot of money, you will be well on your way to increasing your real estate investing IQ.
I have read a few over the last couple of years and find many of them to be very good in teaching effective real estate investing strategies. One in particular I would recommend for any investor, whether they are planning on being a hands-on or hands-off investor is:
Secrets of the Canadian Real Estate Cycle, by Don R. Campbell, Kieran Trass, Greg Head and Christine Ruptash
This book will provide you important information about the ins and outs of various phases of the real estate cycle in Canada.
Don’t overwhelm yourself by trying to cram the entire book into a few days. Pace yourself and soak it in. Make it a goal to read 10 pages per day. Read with purpose – remind yourself every time you pick up the book or listen to the audio book – why you are investing the time to read the book. This will help you stay focused and maximize your learning.
If you find yourself commuting for long stretches of time, invest in the audio version of these books. No excuses!
Turn your car into mobile university. There are many podcasts that focus on real estate investing in general and a few that focus specifically on the Canadian market. Listen to the following podcasts whenever you can to familiarize yourself with the world of real estate investing:
The Everyday Millionnaire
Hosted by Real Estate Investment Network CEO, Patrick Francey, this podcast shares interviews of everyday people that have built wealth through real estate. Now successful investors talk about what it takes to build a portfolio that will enable you to fulfill your life’s objectives
Click here: The Everyday Millionaire
Breakthrough Real Estate Investing Podcast
Learn how to make money investing in Canadian real estate. The podcast serves to educate, motivate and inspire investors of all levels of experience. Produced by two Canadian investors as they interview some of the most successful real estate investors in Canada. You will learn about different types of investing strategies.
Click here: Breakthrough Real Estate Investing Podcast on iTunes
One of the largest real estate investment podcasts. While the content stems primarily from the U.S., the strategies and tips are applicable no matter where you are investing. The podcast combines both real estate investing insights with content to help you develop a successful mindset.
Click here: Bigger Pockets Podcast
2. Align your goals with your significant other
Whether you are married, common law, in a serious relationship, it is important to align your real estate investment goals with your significant other. Both of you need to buy-in to a common plan. Discuss why real estate is important to both of you and how it will help you achieve your short-term and long-term goals.
3. Identify a strategy that suits your needs
There are many ways to invest in real estate. I won’t cover them all here as it would literally take an entire book to get into all of the details.
To help identify which strategy is best for you, ask yourself (and your significant other of course) the following questions:
- What am I looking to gain from real estate investing and Why?
- Do I want a turnkey investment or hands-on real estate investment?
- Turnkey investments often only require your capital. The real estate expert or investment company will take care of the rest. A turnkey investment is best suited for those that are looking to reap the rewards of real estate investing, but don’t have the time or the expertise to “get in the trenches” and manage process.
- If you have time but no expertise, turnkey investments may also be beneficial as it enables you to take action while learning first-hand how real estate investing works.
- If you have time and expertise, you may want to consider a more hands-on approach to real estate investing where you acquire the property, potentially adding value by renovating it, marketing it for tenants and then reaping the rewards by selling it or managing a tenanted property.
- When am I looking to realize returns?
- Just as in other forms of investment, you will need to be clear as to your short-term and long-term objectives. Are you looking for longer-term and more sustainable returns, or are you looking for short-term boosts in income?
- There are strategies that can help you achieve both. As you evolve into a more sophisticated real estate investor, you will apply strategies that help you in the short and long term.
- What is my risk tolerance?
- How comfortable are you with taking investment risks? Hypothetically speaking, what if you lost your investment in real estate, how would that impact your life?
- Your tolerance for risk will also factor into which strategy you end up employing.
4. Access cheap money!
As you get clear about your objectives for investing in real estate, the amount you are willing to invest will become more apparent. If you haven’t done so already, you will need to organize your financial situation so that you are prepared to take action. One of the easiest things to do to increase your access to capital is to leverage the equity you’ve built in your primary residence by taking on a home equity line of credit. Many people are sitting on hundreds of thousands of dollars but don’t know it. Talk to a mortgage broker or your bank and ask them how to access the equity in your home. This doesn’t cost you anything to do and will put you in a good position to leverage low interest rates to generate higher returns from real estate.
5. Take ACTION!
It may seem cliche, but there are so many people that have great intentions and are “ready” to make a move into real estate investing BUT DON’T. Don’t be one of those people. If you are making excuses, you know who you are and you know what excuses you are making. If you follow the steps above, you are ready to move forward. If you are not ready to take steps on your own, partner with someone that has experience and is looking for an investor with the capital just like you.
Make it your goal this year to get into real estate investing. Take a moment and fast forward to the end of the year, imagine what financial position you will be in and what investments you have made – I want you to look back and feel excited about your decisions to invest in real estate instead of wishing you had.
“You don’t have to be great to start, but you have to start to be great”