4 Questions to Ask Yourself Before You Start Investing
Navigating the world of real estate investing can be overwhelming and confusing. I’ve met a lot of new real estate investors who aren’t sure where to begin or who are hesitant about taking that first step. While real estate investing does require a lot of patience and dedication, I would say the hardest part by far is deciding whether or not it’s something you seriously want to pursue.
While taking that first step into real estate investing can seem pretty intimidating, these four questions will help you decide whether or not real estate investing is something that will be worth you spending your time and money on.
What are my real estate investing goals?
Outlining your goals before you even start investing is crucial to your success as a real estate investor. Whether your goals include leaving your 9 to 5 job to invest full-time or flipping a house in six months, setting goals for yourself will give you a set direction and will help you avoid missing opportunities that come your way.
The best part about real estate investing is that there is no right or wrong way to invest. You can do whatever works best for you and you can create goals unique to you and your situation. When creating your goals start by deciding where you want your business to be in six months, one year, two years, etc. and what you are hoping to accomplish during that time.
What kind of education do I need?
While you don’t need any previous experience to start real estate investing, some knowledge about house flipping before you even start is certainly beneficial. Brush up on repair costs, ARV (after repairs value), closing costs, and learn how to do a few basic remodel and rehab repairs. Dedicate at least an hour every day to learn something new about real estate investing. This extra knowledge will help you become a successful flipper faster.
What type of property should I start with?
It may seem tempting to want to start with the biggest fixer-upper you can find, but if you are an inexperienced investor then starting out small is certainly a better idea. When searching for a good house to flip, look for houses that don’t need drastic repairs and are modestly sized. These houses won’t cost nearly as much money to repair, and you’ll be able to make a decent ROI (return on investment). Once you get the ball rolling and have a few flips under your belt, that’s when you’ll be able to pursue the larger homes.
Am I fully committed for the long-run?
This is the one question that I find a lot of real estate investors have a hard time answering. When you are brand new to investing, it’s hard to really know if it’s something you will be committed to or not. If you’ve done a few flips and now realize that it’s harder than you thought, you might also feel the same way. Your commitment to real estate investing is something that you will have to decide for yourself.
If you know you aren’t going to be fully committed, then real estate investing most likely isn’t something you should spend your time and money on. Keep in mind that once you’ve signed the closing paperwork, that house is yours and it’s not going to be easy to get out of if you decide to quit halfway through.
Real estate investing requires much more commitment than any other form of investing. Your answers to these questions will help you decide if it’s something that is worth pursuing or not.
For more information about real estate investing, visit Real Estate Elevated's BiggerPockets blog.