{"id":46098,"date":"2013-07-21T09:33:40","date_gmt":"2013-07-21T15:33:40","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=46098"},"modified":"2024-06-11T08:31:36","modified_gmt":"2024-06-11T14:31:36","slug":"2013-07-21-new-real-estate-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2013-07-21-new-real-estate-investors","title":{"rendered":"A Challenge to New Real Estate Investors: 7 Steps You Can Start Taking Today"},"content":{"rendered":"

My last article discussed why I think the 2% rule is a bad rule of thumb<\/a> for beginning investors.\u00a0 In this article, I\u00a0give\u00a0newbies\u00a0a few simple tips on how\u00a0start taking action\u00a0in their investing career.<\/p>\n

The BiggerPockets forums<\/a> are full of posts from new investors introducing themselves or asking questions.\u00a0 \u00a0Even though there are many new investors looking\u00a0to get started buying properties, very few ever actually become successful investors.<\/p>\n

Many new investors hear how great investing in Real Estate<\/a>\u00a0can be and they want to start buying property right away.\u00a0\u00a0The new investor quickly\u00a0realizes how much money it takes, how much work it takes and how much competition there is.\u00a0 It can be overwhelming for a new investor to visualize all the steps it will take to get to where they want to be.<\/p>\n

The biggest hurdle to anyone starting\u00a0something new is taking the first step.\u00a0 I am not talking about reading books or looking up information online, but actually taking action.\u00a0 My advice to the beginning investor is to take action in their Real Estate career.\u00a0 Analysis-paralysis is a great term for investors\u00a0who over analyze a deal, instead of going for it.\u00a0\u00a0\u00a0I think the term can also apply to newbies who are stuck in the education phase and are not taking action.<\/p>\n

I am not advising that new investors go out and buy a property as soon as possible.\u00a0 However, I am suggesting new investors start the process of investing as soon as possible.\u00a0 There are so many things a new investor can do to get involved and take action towards buying an investment property.\u00a0 Here are a few suggestions on how a newbie investor can start taking action!<\/p>\n

1.) Look at houses for sale<\/h2>\n

One of the most important things an investor needs to know is their market.\u00a0\u00a0Almost every house for sale is listed on the internet somewhere.\u00a0 It is very easy for an investor to look up homes online and start getting an idea\u00a0for what prices are in a particular market.\u00a0\u00a0This is a great start, but a new investor needs to start physically seeing houses as well.\u00a0\u00a0 Start by driving by interesting properties, then\u00a0find some open houses to go to or talk to a Realtor who can show you houses.<\/p>\n

2.) Talk to a Realtor<\/h2>\n

A Realtor can be an investors best asset, especially a beginning investor.\u00a0 A Realtor can show you almost any house for sale, can give you an idea of what prices are and let you know\u00a0about good deals.\u00a0 I would ask around for any referrals of good Realtors from your friends, family and co-workers.<\/p>\n

Don’t be afraid to talk to a couple Realtors to find one who will work hard for you.\u00a0 Be honest with Realtors and tell them your goals and what your plans are.\u00a0 Don’t be afraid to take a Realtor out to lunch or give them something back if you plan to have them show you houses before you are ready to buy.<\/p>\n

3.) Go to an REIA meet up<\/h2>\n

Even seasoned investors can learn a ton from REIA meetings.\u00a0 They are also a great place to network and meet valuable business partners.\u00a0 Whether you want to be a wholesaler, flipper, long term investor or even a Realtor, REIA meetings can link you up with the people you need to know.\u00a0 They are also full of investors willing to share information to help you get started.<\/p>\n

4.) Talk to a Lender<\/h2>\n

One of the first steps for any investor, is talking to a lender.\u00a0 Local lenders have a reputation to up hold and are usually much more accountable than out of town lenders.\u00a0 I have been an agent\u00a0since 2002 and I always recommend using a local lender.\u00a0\u00a0A Realtor\u00a0can suggest a couple of lenders to talk to or you can talk to the bank you have your current accounts with.<\/p>\n

It is best to talk to a lender as soon as possible when looking to buy a home.\u00a0 There may be some unknown credit issues or\u00a0judgments against you, that catch you by surprise.\u00a0 Even though they may be very minor issues, they can easily prevent a lender from giving you a loan.\u00a0 It may take a couple weeks or even months to clear these issues up, so talk to a lender right away.<\/p>\n

5.) Calculate your cash flow on a property<\/h2>\n

Research and education is great for newbies, but reading books and forums is not enough.\u00a0 Not only should new investors be learning by taking in information, they need to be practicing what they learn.\u00a0 A great way to get your brain in investing mode is to write out the expenses and income on a potential property.\u00a0 I prefer to write things out by hand, not a computer, but either one is fine.<\/p>\n

Take out a piece of paper and write down all the possible figures you can on a property.<\/p>\n

Price, down payment, mortgage payment, closing costs, rent, utilities, repairs, taxes, insurance, carrying costs, vacancies, maintenance, property management, legal fees and anything else that comes to mind.<\/p>\n

From these figures, at a\u00a0minimum\u00a0calculate<\/a> your monthly cash flow, total cash needed and\u00a0cash on cash returns.<\/p>\n

6.) Create a Budget<\/h2>\n

Many new investors are blown away by how much it can cost to get into\u00a0 an investment property.\u00a0 If you want to invest, but don’t have the money, take steps to get that money.\u00a0 One of the hardest things for me to do, is look at how much money I spend.\u00a0 I know I spend too much and I don’t want to know just how much I spend.\u00a0 Even though it is not easy to do, it is essential to have a budget, know where your money goes and where you can cut back.<\/p>\n

7.) Write Out a Ten Year Plan<\/h2>\n

I love goals and projecting where I am going to be in one, five or ten years.\u00a0 I wrote out a ten year plan to purchase 100 rental properties and detailed exactly how I was going to do it.\u00a0 At first it seemed like an impossible goal, but once I started writing it out and breaking down the 10 years into one year increments it seemed more possible.\u00a0 At the end of my plan I actually believed I could\u00a0accomplish purchasing 100 properties\u00a0and it provided great motivation.<\/p>\n

Write out a plan for how many houses you want, what the rents will be, what the cash flow will be and how much money you will be making at the end of ten years.<\/p>\n

Conclusion<\/h2>\n

All of these items can be started without spending any money and at any point in your investing career.\u00a0 The sooner you get started taking action, the sooner you will know your market, meet valuable people, and get a clear picture of what you want to accomplish.<\/p>\n

Photo: Micah Taylor<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

My last article discussed why I think the 2% rule is a bad rule of thumb for beginning investors.\u00a0 In this article, I\u00a0give\u00a0newbies\u00a0a few simple tips on how\u00a0start taking action\u00a0in […]<\/p>\n","protected":false},"author":1212,"featured_media":170089,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-46098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/46098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1212"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=46098"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/46098\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/170089"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=46098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=46098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=46098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}