Like many ceremonial events in our lives, such as graduating or getting married, a real estate investment is both exciting and monumental. Investing in real estate is a financial benefit, as well as monetary stake for you and your family’s future. Land never depreciates and an investment property’s value can grow over time. If that weren’t enough to get your wheels turning; it gets even better! Ownership of a real estate provides tax benefits and diversifies your portfolio. Here are the essential steps and elements to get you started towards securing your first real estate investment:
Research general real estate investment language used in the industry, learn the steps to owning a real estate property, the benefits of owning real estate, and risk. Lastly, understand how the basic economic factors of the real estate market.
Stand by your intent to invest
If you are committed to diversifying your portfolio and investing in real estate stand by your decision. Nothing good comes easily. First-time real estate investments seem increasingly difficult to obtain, but it is not impossible. Everyone started somewhere. Commit to your investment and you will get an outcome.
Develop a strategy
Your strategy is to buy a property that generates positive cash flow. Develop an outline of the steps needed to help you achieve your goal. Perhaps you need to time block for research, identify a savings goal, network to find an investor, find an agent and research neighborhoods. Also, have a strategy for evaluating the property’s potential to generate positive cash flow. Become familiar with Cash on Cash Return & CAP Rate. Failing to plan is planning to fail.
You need capital/money to invest in real estate. Determine if you will be self-financed or will be working with an investor. If wanting to partner with an investor make sure you have a narrative on why they should work with you. Explain your strategy, goal for the property and how he/she could benefit from investing in you. Your research, strategy, goals, and action plan will inspire the right investor to invest in you.
Purchase & Protect Property
Once you’ve purchased your investment property, establish a Limited Liability Company (LLC). Next set up a bank account and use this for all expenses for your investment property. Structuring a business and bank account this way provides liability protection and pass-through tax status while keeping business paperwork and formalities to a minimum.
When investing in your first property, you may come across numerous trials and tribulations, but the great news is I’m here to help you stay focused and achieve your end goal. Reach out with any an all questions and remember, you got this!