One of the most asked questions on Biggerpockets is from people asking, “Where Do I Start?”. Often it’s a new investor wanting to learn about real estate investing, someone wanting to buy a house to rehab, a would-be developer or contractor, or maybe even a new real estate agent wanting to get tips on starting in the business. The answer is the same for each: start at the beginning!
As a real estate developer and contractor, I have learned to apply a trade secret to other parts of life. That lesson is this, without a solid foundation, nothing else that you do will endure.
When planning a construction project, the first thing we do is get a lay of the land. Next we find out everything about that parcel that has to be dealt with, and planned for. After knowing that criteria, we have a structural engineer tell us exactly what it will take to support the structure, from the footings, to the walls and roof. Once we have that, we can design what your eyes see as the final building. However; it’s all the work that goes in beforehand, the utilities, the steel rebar, the footings, the slab, etc. that allows the building to endure for decades without failing. So too with your real estate, development, construction career. The very first step, is to do the work necessary to build a solid foundation, FIRST!
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Where Do You Start? Start Here!
- Real Estate Principles: I would strongly suggest that no matter what area of real estate investing, construction, development, etc. that you want to become involved in, that you take a class in Real Estate Principles if possible. Understanding the various instruments used in real estate, (from title, grant deeds, notes, escrow, loan docs, etc.) will give you a tremendous amount of confidence in conducting your business, and a good foundation to begin your journey. It’s not necessary to get your real estate license, though I personally think it comes in handy.
- Get TO Know Your Local Real Estate Market! There is no substitute for immersing yourself in your local market. Read the classifieds, pick up real estate books at the supermarket, search online, etc. Look at what is listed for sale, and watch how long those listings are on the market, and find out what they sell for. Note the condition of houses, finishes, amenities, lot size, etc. (Learn how to compare homes) Though it may seem overwhelming, if you choose the market you are interested in, and watch every single property that comes up for sale or sells in that market, you will soon KNOW that market, which in turn will give you all the information you need to make successful offers, etc. in that market, and how to price your properties to sell.
- Financing – Right after “where to start” , questions on financing are probably the next most asked subject. Whatever type of property or project you are interested in, there’s various financing options available. Learn about the various types of loans, AND the process of financing. (Once you fill out the application, what happens next? What is the process? Ask a lender if they will explain it or have a brochure explaining it)
- Go To Open Houses – Go check out Open Houses whenever you can. Don’t worry about if you are a “buyer” at the immediate time. Just tell the agent you’re interested in learning about the local market; and are out snooping around. Most agents will be happy to chat with you, and give you some useful tidbits.
- Go To Local Building, Planning, and Housing Departments (if you are interested in doing rehabs, developing, construction, etc.) Explain that you are considering getting into development, or rehabbing and ask if they have anything that outlines the process of getting permits, planning, a list of fees, building requirements (such as set backs, landscaping, or anything else that might help educate you) Housing Department – Ask if there are any programs for financing available in your City (Down Payment Assistance Program, etc.)
- Find Qualified Workers – Whether you are using a handyman for small fix it type things, or licensed contractors, it’s always good to locate them ahead of time. Check licenses, bonds and insurance where needed, get references, etc. BE SURE TO ASK HOW THEY CHARGE AND WHEN PMT. IS EXPECTED. Don’t pay for work that isn’t done. Work out details for purchasing materials if necessary, etc. Find contracts that you will use.
If you can put the time in to doing these things, no matter what area of real estate you decide to get into, you will have a very solid foundation on which to build a successful business.