How To Start Investing In Real Estate

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Millions of people are eager and interested in learning how to start investing in real estate. There’s no better place to learn the ropes than taking the Home Flipping Workshop with Glenn and Amber Schworm. 

It’s okay if you have no idea about the industry because you’re not alone. Every success story started somewhere. 

Learning how to start investing in real estate requires savvy investors to navigate the system, understand the terminology, gain tips and strategies for best practices, and avoid unwanted mistakes. At the Home Flipping Workshop, you will find everything about real estate investing from A-Z. 

We don’t want to load you down with too much information, and that’s why we’ve detailed all the necessary insight new investors need to know. 

Most importantly, let’s start with gaining a shared definition of real estate investing.

WHAT IS REAL ESTATE INVESTING?

Real estate investing offers even more in addition to leaving behind your soul-sucking 9-5 job, taking control of your time, and sustaining financial freedom. 

Real estate investing is the purchase of land or property attached to the land. Real estate can include fences, trees, or buildings. 

Land real estate is any natural surface or airspace. Real estate includes the land and any permanent additions, and real property is the set of incentives associated with owning real estate. 

Overall, real estate investing is purchasing land and property in various categories. These categories include commercial, industrial, and residential real estate investing. At first glance, real estate investing sounds expensive, but you don’t have to be a high roller to get started. 

Investing in real estate is one of the proven ways to build unlimited wealth. There are seven common ways to start making money in real estate investing. 

Seven Ways to Make Money in Real Estate Investing

1. Value Appreciation: Typically, property values increase over time in a growing market. The increased value of the property is referred to as appreciation when the appraised value of the investment goes up. Good investors understand the importance of buying the worst-looking home in the best neighborhood. It is financially wiser for investors to purchase an underpriced home in a great community and fix it up to accumulate appreciation quicker.
2. Rental Income: While there are many ways to make money in real estate investing, rental homes are a great way to generate income. Renting a property will gain appreciation or added value and accumulate monthly revenue. Some landlords use property managers, but you can manage your properties to generate more passive income. Be sure to charge your tenants enough rent to cover the mortgage, repairs, maintenance, and your profit.
3. Wholesaling: This strategy allows investors to be middlemen between sellers and buyers. Wholesalers will identify and secure a property under market value and then assign that contract to an end buyer.
4. Prehabbing: The process of positioning a property for resale by adding minor cosmetic updates. The property typically sells to an investor who will complete a total rehab.
5. Rehabbing: We need to add information about rehabbing which follows prehabbing!
6. REIT Investing: A real estate investment trust (REIT) is a company that owns and manages income-producing properties. Investors can then purchase shares in REIT and benefit from the profitability of real estate without owning physical properties.
7. Online Real Estate Platforms: Online platforms help connect investors with real estate developers. The investors help finance real estate projects in exchange for monthly or quarterly repayments, including interest.
8. Real Estate Syndication: A real estate syndication is a form of crowdfunding, but with a team-oriented approach. Investors pool resources and skills to buy large-scale properties and split the profits.

Seven Unique Benefits of Real Estate Investing

1. You can earn money while putting most of your time and energy into your regular job.
2. If real estate values increase, your investment also will rise in value.
3. You can put real estate into a self-directed IRA.
4. Rental income is not included as part of your income subject to Social Security tax.
5. The interest you pay on an investment property loan is tax-deductible.
6. Real estate values are generally more stable than the stock market.
7. Real estate is a tangible physical asset.

TEN TRAITS OF SUCCESSFUL REAL ESTATE INVESTORS

Real estate investment mogul Warren Buffett says, “The most important quality for an investor is temperament, not intellect.” 

You will make mistakes. 

Please take advantage of every mistake by using them as small opportunities to reinvent yourself. 

The following ten attributes are the traits that real estate investors should aim to possess to transform into successful entrepreneurs. 

1. Drive
2. Boldness
3. Passion
4. Flexibility
5. Self-discipline
6. Imagination
7. Standards
8. Financial Savviness
9. Team-oriented
10. Charisma

GETTING STARTED AS A BEGINNER

The best way to learn is by getting involved. Try reading investing blogs, books, newsletters, and magazines as a first step.

Most importantly, never stop learning. 

The real estate investing landscape is constantly evolving, and every good investor understands the importance of staying connected and informed. 

At the Home Flipping Workshop, Glenn and Amber Schworm will give you all the tools needed to succeed as a real estate investor for a lifetime – this is the best way to get started.

Learning the ropes of negotiating and making offers is an invaluable asset in this business.

Also, taking professional tours of various properties is a helpful way of gaining good ideas of what to look for when it’s time for you to start buying.

First-hand experience for real estate beginners pays high dividends as you continue in the business.

There’s a lot to learn, but every component is worthwhile.

ATTRIBUTES OF A LANDLORD

Being a landlord comes with some significant responsibilities. What are some characteristics required for investors operating as landlords?

When investing in real estate as a landlord, you’ll need to understand four critical protocols:

1. Choose the right property
2. Prep the residence
3. Find reliable tenants
4. Prepare to complete routine maintenance requests.

Maintenance is an essential factor to consider, such as repairing drywall, unclogging toilets, installing ceiling fans, etc. 

Hiring someone to do maintenance will diminish a portion of your profits. As a beginner in real estate investing, it’s best to learn how to do repairs on your own to save money.

You will need a maintenance team to manage these details as you add more properties to your real estate investing portfolio. 

A maintenance team consists of cleaners, handypersons, and contractors. If you’re not handy with tools, don’t have time to do the work yourself ( which we don’t recommend), or don’t have spare cash, being a landlord may not be a good option for you. In addition to considering the characteristics of a landlord, there are ten traits that successful real estate investors must-have.

REAL ESTATE JARGONS, TERMS, AND ACRONYMS

As you continue in the business, you’ll learn that real estate investors have a language of terms and acronyms that you must know.

Sometimes this jargon can get confusing. 

Understanding the basics of real estate terminology empowers you with the confidence needed for others in the industry to take you seriously. 

Memorize necessary jargon as you read through real estate investing literature; this is especially important before getting started.

Examples of Professional Real Estate Investing Terms  

Capitalization Rate: Capitalization rate, or “cap rate” for short, is a formula used to calculate the value of an investment deal. The cap rate is a percentage calculated using the property’s current market value.

Cash Flow: Cash flow is a concept used in business and personal finance that describes the inflows and outflows of cash. For example, a rental property investor will often calculate the monthly cash flow, which is all the rental revenue generated by the property minus all expenses. Investors will search for properties that will provide a positive cash flow every month.

Net Operating Income (NOI): Net operating income goes hand-in-hand with the cash flow calculation. Once you have subtracted all monthly expenses from the monthly rental revenue, the excess dollar amount is the net operating income. In LAYMAN’S TERMS, the NOI is the ‘profit’ portion of the operation.

Real Estate Investment Trusts (REITs): Real estate investment trusts (REITs) are firms that typically own and operate portfolios of income-producing real estate properties. Some REITs will specialize in specific niches, such as residential or commercial. Investors who prefer to take a more passive role in real estate investing might find REITs great options.

Real Estate Owned (REO): Real estate owned, or REO, properties have been reclaimed and owned by lenders, typically banks. After a property forecloses, a lender will usually remove liens and expenses from a property, making it sell faster. REO properties provide an excellent option for investors to purchase property below market value.

Return On Investment (ROI): The most common way to measure an investment deal’s relative success is the return on investment (ROI). The higher the return on investment percentage, the better the gains.

MAKE NETWORKING YOUR PRIORITY

Attending networking events should be a priority for aspiring real estate investors. Breaking into the industry will require some significant connections. 

Interacting with other real estate professionals offers a slew of information specific to the market. 

Most importantly, make it your purpose to attend networking events, build your contact list, and use these events to learn more about the ever-changing industry. 

Take in as much information as possible – do your homework.

You will also learn much-needed tips about drafting a real estate business plan during the networking process.

Six Questions to Ask When Drafting a Real Estate Business Plan

1. What is the problem in the marketplace that your business will solve?
2. What is the reason why you are going into the business?
3. What economic trend will shake this market?
4. What are your specific business goals?
5. How will you strategize actionable steps to accomplish your goals?

Things To Keep in Mind When Answering Questions About Your Business Plan

  • Make a specific prioritized list, starting with a low-level uncomplicated concept that is mission and vision focused.
  • Learn to say "no," understanding that your time is precious, and never settle for "good enough" – you will also find yourself happier and healthier.
  • Fight the fear of missing out. It is rooted in greed – be disciplined.
  • Be super-careful not to divert frequently with recurring commitments that will derail your plans.
  • Prune prior commitments because time management dictates success.

    • MISTAKES TO AVOID IN REAL ESTATE INVESTING

    Many real estate investors have learned by trial and error, losing much money. 

    Mistakes or failures have taken many real estate entrepreneurs to rock bottom economically. However, you don’t have to make the same mistakes as other investors. 

    The following insight will help you avoid common mistakes that beginner investors often make.

  • Following the Herd: Relying on speculation and crossing your fingers that a property will appreciate is one of the worst real estate investing strategies.
  • Buying at Market Value: Purchasing a property at market value leaves little room for profit potential.
  • Getting Emotional: Keep a level head and maintain a business-like approach. No matter how good the first potential deal might seem, one should always mind their due diligence.
  • Investing Too Much of Your Funds: Avoid the risk of putting too much of your money into a deal. Investors are wise to separate their finances from their business, personal vs. business.
  • Not Having Multiple Exit Strategies: Have a backup plan, such as a wholesaling or a buy-and-hold strategy or short term rentals , if a house flip goes awry.
  • Going Solo: Real estate investing is a "people person" business. To be successful, investors need a strong network of professionals to rely on, whether for finding their next deal, creating a partnership, or asking for expert advice.
  • Neglecting Landlord Insurance: Protect your new investment: Rental property owners should always obtain landlord insurance in addition to homeowners' insurance. This type of insurance generally covers property damage, lost rental income, and liability protection—in case a tenant or a visitor suffers an injury due to property maintenance issues.
  • Overlooking Unexpected Costs: There's always the potential for an emergency; plan to set aside 20% to 30% of your rental income for these types of costs so you have a fund to pay for timely repairs
  • Ignoring Legal Obligations: Rental owners must be familiar with state-based landlord-tenant laws. It's important to understand, for example, your tenants' rights and your obligations regarding security deposits, lease requirements, eviction rules, fair housing, and more to avoid legal hassles.

    • LEARN EVERYTHING FROM A-Z TO GET STARTED IN REAL ESTATE INVESTING

    Stop procrastinating, be realistic, and start the process of making your dreams come true. 

    Trainers at the Home Flipping Workshop are prepared to teach you step-by-step and walk you through the process. 

    During the 3-day Home Flipping Workshop, you will get answers to questions like:

  • What do I look for when aiming to find the right location?
  • Should I buy or finance?
  • What’s involved in doing your first investment property
  • Can I invest using other people’s money?
  • Can real estate investing help me reach my goals?

    • Join countless everyday people making $40-100K per deal flipping houses and deals and you can use other people’s money to do it. 

    Act now to get on the fast track to financial freedom.