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Zhi Finance » Real Estate Investing for First-Time Real Estate Investors

Real Estate Investing for First-Time Real Estate Investors

You’ve probably read everything in the market related to real estate investing and are well aware that many of the world’s millionaires made their fortunes in the real estate market. So, I’m sure you’re ready to throw your hat into the ring and start your own real estate portfolio. As an investment strategy, there is certainly nothing wrong with this, although there are many wrong ways for investors to go about the process.

Real estate speculation is my area of experience, and much of what will be discussed here relates to speculation, although some of the information can span to rental properties and other types of real estate investments. Even personal property can be a real estate investment. Real estate is one of the few forms of investment in today’s society where you can really see the changes that are taking place in them.

It is truly amazing to watch once neglected properties that were in a state of disrepair suddenly come back to life before your eyes. However, there is a lot of work to be done in the process, which is often overlooked. It’s much like the labor that goes into childbirth. The pain is quickly forgotten when looking at the face of the result.

By remembering these things during your first time, you should be well on your way to future success. You should also realize that the first few investments are learning experiences more than anything else. If you don’t achieve the success you hoped for (or a lesser degree of success than hoped for), you shouldn’t give up on your dreams altogether, just learn from the mistakes you’ve made along the way and from the mistakes others have made.

Real estate investing is not an exact science. There is no formula that guarantees success in this business. Even seasoned professionals find that even properties they have high expectations for have the occasional bump in the road. Along the way, things happen that cost money, delay the project, or set it back. These things are undoubtedly stumbling blocks, but they should not be allowed to disrupt the entire project. When these things happen, go back to your original plan, reassess the situation, and create a new plan taking into account the necessary adjustments. The key is to stick to a plan throughout the process, not to throw it out the window and fly by the seat of your pants.

Your plan will be the lifeblood of your entire project. You need to have a written plan and budget. A good rule of thumb is that you set aside twice as much money in your budget as you planned. This provides you with a safety net for the inevitable situations where things go wrong. In almost every flip you encounter, things will go wrong. Even the seasoned professionals who present their flipping efforts on TV shows run into problems with almost every flip, fix or renovation.

For your first few investment purchases, it is recommended that you purchase a property that needs only minor cosmetic repairs rather than a complete restoration or renovation. This will allow you to get your foot in the door without a huge risk mentally, emotionally and financially. These properties are less lucrative, but also less risky. They also allow you to gain valuable experience and raise a little money to invest in future properties that require more extensive work.

Keep your eye on the carrot at the end of the project. Too many property investors give up before they reach the point of real profitability. Our goal is profit at the end of the project.