4 Simple Tips In Getting Started With Real Estate Investing

If you had been planning on making your very first real estate investment for some time already but haven’t put them into action yet, then you’ve come to the right place. Here, I’ll give some simple tips and things you need to consider before making the big move.

1. Ask yourself what your objectives are.

Always begin with the end in mind. Why do you want to invest in real estate? What goals do you want to achieve in doing so? Is it for passive income and eventually for financial independence? How much do you want to earn from real estate? These are just some of the questions you need to answer before starting your search. Concrete goals translate to a concrete plan of action, and with this, the odds of succeeding increases.

2. Knowledge is power.

Before getting your feet wet, try to learn as much as you can about real estate investing. We are lucky to be living in a world where a vast range of information is available over the world wide web for free. Learn the taxes involved in acquiring and selling a property, research on the different financing options available, read about real estate laws that may affect your decision in buying a property. Practically everything you need to know can be found on the net, you just have to be diligent and patient enough to learn.

3. Find your niche.

There are several ways of making money from real estate investments. Renting, flipping, rent-to-own are just among the most common practices. There are people who have built expertise on finding foreclosed properties. Whatever niche you choose, just remember to be an “expert” in that category so that when an opportunity comes, you’ll be more than prepared to grab it.

4. Start building your network.

Finally, you can accelerate your chances of finding good deals by increasing your visibility in the real estate market. Make the properties come to you and not the other way around. How? Join clubs and communities that share your passion in real estate investing. Participating in auctions is also an option.

With these tips in your mind, I’m sure it won’t take long before you acquire your first ever real estate investment.

How To Find Good Properties

In any business, the net operating income (NOI) is a vital measure of a company’s performance and is a clear indication of whether the company has made profits from its operations. The net operating income is defined as the company’s income after all expenses related to operations such as cost of goods sold and employee’s salaries are deducted.

Similarly, real estate properties that are used to generate rental income such as multi-door apartments, duplex, and condominiums also incur operating expenses like real property taxes and maintenance costs. Below is an example of how NOI is computed.

Example. You have found a beautiful 8-door apartment where the monthly rent per unit is $125.

Assumptions:

• Real Property Taxes = $750/year
• Property Management = $120/month
• Property Insurance = $300/year
• Allowance For Repairs and Maintenance = $70/month
• Vacancy Rate = 10%
• Collection Loss (assume not all tenants will be able to pay) = 3%

For this particular example, you will be earning a little less than $600 per month net after paying off your mortgage. Therefore, this looks like a good deal for you as it will put additional money in your pockets. Of course, reaping the benefits will take some time as you have to finish paying the monthly amortizations first.

In the next article, I will show why it is vital for you to compute a prospective property’s net operating income.