Take the first step in real estate investing by creating an action plan. Here are four items to include:
Just as with planning to purchase a home the Healthy Way, creating an action plan will be key to jumpstarting your journey. Here are four items to include in your action plan to get started:
- Outline your vision and financial goals
First, make a detailed list. Include the following: 1. Your cash reserves. 2. Your risk tolerance. 3. Your reason for investing, such as passive income, retirement income, improved cashflow, etc. 4. The rate of return you are expecting. 5. The amount of time you can devote to your real estate investment. For example, you may have more time to devote to being a landlord than flipping properties. If you don’t have time to devote to being a landlord, then you may want to include property management services in your plan.
2. Determine which type of real estate venture will best meet your needs
Each property you consider, should be evaluated based on its unique features, such as layout, aesthetic design, location and amenities.
Types of investments include:
Short-term rentals – Investors rent to travelers via vacation rental services like Airbnb.
Long-term rentals – Investors rent to qualified tenants who will reside in the property for at least one year.
Real estate development – Investors purchase a home at below market value. Make repairs or upgrades. Then, sell it for a profit. This is commonly referred to as flipping houses.
Then, when writing up your action plan: amenities for long-term rental properties may include family-friendly neighborhoods with great schools, and for short-term rentals, amenities may include locations near vacation destinations and tourist attractions.
3. Outline your funding options and financial resources
Thirdly, the most important aspect of developing your action plan is to determine how you will fund your investment. Outline the amount of cash you have available and understand your credit score and collateral if you need to get a bank loan. Also, dig deeper into the real estate property by evaluating the numbers on the real estate investment you selected.
4. Find a real estate mentor or expert to help you make the right decisions
Finally, link up with an experienced real estate investor to learn the ins and outs of the business. You can also consult with a real estate agent about your investment plans. They can provide great information on local real estate markets and available properties.
In conclusion, investing in real estate is a great way to build generational wealth. Use these tips to devise a good action plan to help you reach your financial goals.