How to Become a Real Estate Investor: A Step-by-Step Guide
Are you wondering how to become a real estate investor and start growing your very own property portfolio? We’re diving into the nitty-gritty of what it takes to find your first property deal and build a lucrative real estate investment business.
Real estate investing is on the rise and now is a great time to get into the market. In fact, according to an article in The Globe and Mail, investors account for one-fifth of all home purchases across Canada!
If you’re brand new, investing can feel overwhelming, but there are a few simple steps you can take to set yourself up for success. With a clear plan and the right strategy, being a real estate investor is incredibly exciting, rewarding, and lucrative.
What qualifies you as a real estate investor?
The great news is that you don’t need any special credentials or qualifications to start investing in real estate. Many people choose to get their real estate license so they can get commissions on sales and find private deals, but this is absolutely not mandatory to start finding great property deals.
Even though you don’t need specialized qualifications, it’s important to educate yourself as much as possible on the world of real estate investing so you can become an expert in your field.
Is it hard to become a real estate investor?
Building a lucrative real estate portfolio isn’t incredibly difficult, but it does take time, effort, and patience. New investors should be prepared for a learning curve as they figure out how to navigate the market and build the connections that will help them succeed in the industry.
If you’re brand new to real estate, BuyProperly has opportunities for investors to jump into the property market without tons of money (or risk!).
How? Through fractional real estate investing, BuyProperly offers people the chance to own properties for as little as $2500 with a 10-40% return on investment! Want to learn more?
Now, let’s dive into the six steps you’ll need to follow to become a successful real estate investor.
Step One: Educate yourself about real estate
As a new investor, there is no shortage of concepts, terminology, tricks, and lessons to learn about real estate. The single most important thing you can do is educate yourself.
What are some ways you can learn more about real estate?
- Read as many books and articles as you can on the subject
- Attend local seminars and meetups to discuss real estate with investors, realtors, and brokers
- Find supportive online communities. Sign up for the BuyProperly email list
Your real estate education is an ongoing process that will change and adapt as you become a more confident investor. Be open to meeting new people, making connections, and learning as much as you can!
Step Two: Get crystal clear on your goals
There are many different paths you can take as a real estate investor that depend on what short-term and long-term goals you’re trying to achieve.
The best thing you can do before getting started is to sit down and write out your 1-year, 5-year, and 10-year goals. Remember, real estate should be a long-term investment that not only generates some cash flow, but also appreciates in value the longer you hold onto it.
If you’re looking for instant returns and a quick exit strategy, real estate and rentals is probably not the best investment to start with.
Here are some questions to ask yourself:
– why do you want to become a real estate investor?
– do you want real estate to be a full-time profession or a more “passive” investment strategy?
– what financial goals are you hoping to achieve in the next 1, 5, and 10 years?
– are you prepared to adopt a “buy-and-hold” strategy with your real estate portfolio?
– are you more interested in monthly cash flow or long-term appreciation?
If you’re not in a position to put a 10% or 20% down payment on a property, consider working with partners or starting with a fractional ownership model. At BuyProperly, their investors start with as little as $2500 and see projected annual returns of 10-40%.
If you’re interested in learning more, visit www.buyproperly.ca
Step Three: Nail down a location and property market
Deciding on which location you want to target is an important part of building your real estate portfolio. Are you planning on investing in your local area or would you consider expanding your search to include neighbouring towns and cities?
When looking for areas to invest, focus on locations with job stability, nearby schools, facilities like parks and recreation centres, predictable rents, and opportunities for economic growth. Remember, you’re building up a real estate portfolio for short-term cash flow AND long-term appreciation, so make sure you choose a stable location.
If you’re willing to purchase investments outside your local area, you can often find great deals in smaller cities and various up-and-coming housing markets! At BuyProperly, they help investors across Canada find rental properties through fractional ownership. Investors can be 100% remote.
Step Four: Start building your network
Many real estate investors attribute their success (at least in part) to having an incredible network behind them.
One of the most important things you can do as a new investor is to start making connections with other investors, local realtors, lawyers, and brokers. These people know what’s going on in the housing market and they often have access to insider opportunities before the public finds out!
Not only will this allow you to take advantage of off-market deals and get a leg up on the competition, but you’ll also have the confidence and knowledge you need to make smart financial decisions. Having a great “team” by your side will make the process go more smoothly.
Step Five: Learn how to assess properties for sale
When you’re trying to figure out whether or not to purchase a property, there are many things you should keep in mind.
Here are a few examples to consider:
Income potential: What is the current rental revenue and is there an opportunity to increase that? Are there improvements that could be made to the building? Is the rent lower than the average for the area?
Expenses: What are the ongoing expenses for the property? How much is heat, water, and electricity? What will your insurance costs be? Don’t forget about potential vacancies! When analyzing property income, assume a 10% vacancy rate for the year.
Repairs: Are there any significant one-time repairs that need to be done on the property? How old is the roof and windows? What’s the age of the hot water tank and furnace? Factor in all one-time repair costs when analyzing your budget.
Management fees: How will you be structuring property management? Will you be handling it yourself or hiring a company to collect rent, find tenants, and perform routine maintenance? Factor this into your expenses.
Location: We’ve already talked about the importance of location, but it’s crucial to analyze the location for every single real estate deal you make. In some cities, adjacent neighbourhoods (and even streets) may seem similar, but they actually have significantly different average monthly rents and property appreciation.
Ask your realtor or property broker for more information on how you should analyze rental properties.
Step Six: Dive in and make a deal
It’s true what they say: practice makes perfect. No amount of books or real estate seminars can replace the knowledge you’ll get from jumping in and taking action.
Remember: there’s no such thing as a perfect property. Being a real estate investor means analyzing properties carefully, weighing the pros and cons, and making a decision based on your goals and investment strategy.
Don’t be afraid to get out there and start looking at properties, putting in offers, and making deals.
If you’re ready to invest in your first (or next) rental property, be sure to check out BuyProperly’s available listings here. You can get started for only $2,500.