Real estate investing is a great way to make money. With the right assets, you’ll have guaranteed cash flow, tax benefits, and diversification – just about everything you need to build wealth.
If you’re planning on starting a real estate business, here’s how to get started.
Define your objectives
You need to assess and prioritize your future plans before you can actually start the business. This means evaluating your professional, personal, and financial goals, as they will affect your operations. Start by setting goals for where you want to be in five, ten, and fifteen years. Then, identify the most urgent steps you need to take to get there. While this step might seem simple, overlooking it might be unwise. Goals will help you create an effective business strategy and remain focused. The best goals will align with the SMART methodology, i.e., they are Specific, Measurable, Achievable, Relevant, and Time-sensitive.
Using this approach will enable you to balance your ambitions with actionable steps as you plan out your future. SMART objectives are great for both short and long term time frames, so they are ideal for any starting point.
Do due diligence
Long term business success is always preceded by comprehensive industry research. It should identify specific niches, market areas, and potential competitors. There several market entry strategies you can model your business on. Most new real estate investors will start with wholesaling (an approach where you contract a home that’s on sale then find an interested buyer, making a commission in the process) – it helps them learn the basics of property investment. However, depending on your needs, you may consider buy-and-hold and rehabilitation strategies too.
Your research should also focus on determining the best market area for your chosen niche. Study the median rental prices, home values, and neighbourhood amenities. Don’t ignore properties outside your location while you do this. Networking events, online research, even mentorship will help you during this phase of your journey. The more research you do now, the more prepared you will be when it’s time to implement a business strategy.
Create a financial strategy
There are several ways to enter the real estate market with minimal or zero financial investment. However, that does imply you shouldn’t have a look at your finances. If you plan to finance your investments with a loan, chances are that your lenders will request your financial records. You must be familiar with these details before anyone ever asks you questions. Make requests for copies of your credit history and review any existing investments or bank accounts you may own.
There are several ways you can finance your real estate business. You may start with something conventional, like a government loan or Mortgage from a financial institution. Alternatively, you may also choose nontraditional funding options like joint ventures, private money lending circles, or crowdfunding. You may not need to immediately select a specific funding source, but you should be familiar with the options available.
Develop a strategy
After you’ve carried out sufficient research, you should formulate a plan to help your business succeed.
Your plan will need to determine:
- How much money you can invest, and the proportion of your savings you are willing to devote to property investment in future years.
This should be straightforward, but it still helps to consult a mortgage broker so you can review your borrowing options. Your broker will also advise you on the best ways to release equity from your home if you want to do so. It will also help to create an emergency cash fund that’s separate from your total investable funds. This should cover at least six months’ worth of living expenses, so you have a safety cushion if you lose your primary income source.
- Your specific objectives
What is your goal? It’s obvious that you want to be rich or quit your day job or build your future – but what does that mean for you, exactly – in pounds?
And also important, when do you want to achieve that goal? The answers to these questions might surprise you. You might think you’ll be fine with an income of about $15,000, but your opinions may change after taking an honest look at your ideal lifestyle. The same goes for how long you’re willing to wait for the investment to mature. Although it is an often-overlooked factor, it cuts to the heart of nearly all investment decisions.
Here’s an example: consider two properties
A) This property will generate a 13% ROI but likely won’t ever increase in value
B) This property will return a 6% return but could double in value over the next 10 years.
If your target is to achieve a specific monthly revenue within about 4 years, property A is ideal. However, if you’re willing to wait about 12 years to achieve your goal, Property B might be the better option. Remember that it’s still a gamble because you’re betting that your property will appreciate, but it’s got plenty of time to do so. If it does, you’ll gain a lot more than you would have by investing in the other property.
Your business plan should also include the number of rental properties you intend to own, your lead generation options, how much time you allocate to your business each week or month, and the knowledge and skill you can apply to your property business.
Finance your dream
Financing a real estate venture can be intimidating, especially for new investors. It’s not hard to see why. Starting a real estate business usually requires a substantial upfront investment. While this may be true, it’s also not impossible. You may also finance your venture with little or no money.
How much does it cost to start a real estate investment company?
Interestingly, it’s not expensive to start a real estate investment business if you’re setting up as a limited company. You shouldn’t pay more than 100 pounds if you’re using a third-party intermediary. If you have all the required documentation and paperwork, the process can take as little as 15 minutes. It’s important to note that this won’t be the only cost. There will be accountancy fees, and the other costs of running a company.
How do I start a real estate investment company with no money?
There are several ways to finance your real estate business with little or no money. Here’s a video on the subject
Build a team
While it’s tempting to go all-in and try to keep all the profits for yourself, it’s rarely a good idea. Real estate investment requires lots of specialized knowledge and skill. You will not master everything all at once. That’s why you need a team of professionals to help you through the investment process. This should include home inspectors, real estate agents, contractors, property managers, and so on.
Find investment prospects
After you choose a strategy, secure financing, and establish a team, you will need to find properties for investment. The first step in this process is to identify an ideal location. The conditions should favour investment. You’ll want to look at demographic, infrastructure, job growth, crime rates, social services, and so on. You may look at market reports on major cities in the United Kingdom and consult with a real-estate mentor to get started. The insights you gain will help you decide where to invest.
Get started
Real estate property investing is one of the best ways to create sustainable long-term income. It might seem complicated, you’ll surely succeed with the proper planning.
If you’re planning to start a real estate venture of your own and need advice or mentorship, Momentum Property Education has several practical courses you can sign up for. The content comes with access to a knowledgeable community of successful property investors for mentorship, so you’ll have insightful advice every step of the way.
