6 Key Questions to Consider Before Investing in Real Estate

Thinking about real estate investing? Well, if you are reading blogs like this, you have probably put a lot of thought into it, and you likely have a lot of questions. So now what? You know you have a lot of work to do before you attempt your first deal, but it can be difficult to know where to start. While this is by no means an exhaustive list, the following questions will help you get started on your new journey.

Do I Need a Partner?

Partnering with someone else can be tricky. A great match can lead to great success, but a bad one can mean the end of your investing career. Whether you need a partner depends on any one of several factors:

• Are you lacking the capital you need to get started?
• Do you struggle with making industry contacts?
• Is there another key skill set in which you feel you are weak?

If you answered “yes” to any of these, a partner may make sense for you. However, remember that you don’t necessarily have to make that decision now. You can try going it alone first and consider a partner down the road if you aren’t sure about partnering right now.

Who do I Want to Work With?

Outside of the partnership question, you still need to decide who is going to be part of your larger team. For example, having a real estate agent you can rely on is important. Agents have leads, and if you have an agent who knows what he or she is doing, you will be well on your way. You will also want to get to know contractors or property managers, depending on what type of properties you plan to invest in—especially if you do not have the personal background to handle these tasks. Another key component in your team is a real estate attorney since there will be many legal contracts in your future.

How Will I Generate Leads?

Thanks to social media and the digital marketing avenues at our fingertips, finding leads has never been easier. But that doesn’t mean properties will fall in your lap. Start with a budget—this will dictate the marketing options available to you as you get started. If your budget allows, consider a direct mailing campaign. If not, start with social media and even Craigslist. Regardless of the channels you decide to use, have a strategy in mind so you don’t waste time or money.

Do I have Reserve Capital?

Even if you landed a great deal tomorrow, it will be several months before you see any income from that deal. Do you have money to live on while you get your feet under you? Nothing sours your outlook faster than lack of funds. Don’t fall into a trap of poor decision-making because you are looking for shortcuts to compensate for a dwindling bank account balance. It’s not uncommon for new investors to maintain their full-time careers until they get their investment business off the ground. Consider doing the same if you are not able to completely devote yourself to investing immediately.

What Do I Want from Real Estate Investing?

Investing is one of those fields that has many facets. If you have a clear vision of what you want your business to look like, you can shape your strategies accordingly. Maybe you want to build a portfolio of rental properties. Perhaps you are leaning more toward rehabbing a property or two per month. Your answers to these questions shape how you look at each potential deal.

What Don’t I Know?

As the saying goes, we don’t know what we don’t know. However, recognizing that there are questions you may not have even thought to ask yet is a step in the right direction. If you have a mentor, talk with them about what they wish they had known before they got into this world. If you don’t have a direct contact, do as much reading as you can. Find articles, blogs, and companies who are doing what you want to do and learn what you can from them.

You may have other questions beyond what is on this list. After all, this is a complex world; it would be foolish to jump in without doing what you can to prepare. But once you have answered the big questions, and the right deal comes along, you will be ready to act. Then, you will become a property investor.