I want to invest in Real Estate but how do I start? What do I do? Where do I start?
It is a question new investors ask me on a regular basis and never an easy one to answer.
Why is this such an easy question for a new investor to ask but incredibly challenging for experienced investors or industry experts to answer?
I have always felt this question is far more personal than most new investors realize. I will my best to help guide you to an answer on this question.
Part of the challenge is the immensity of the question. Some worry about choosing the right market, others about the right type of property. Many new investors have heard stories about massive fees or penalties. Getting started can be a scary prospect but lets break it down and I will do my best to help you overcome any concerns.
Take a moment to dream
I want you to imagine your real estate journey like a voyage at sea. There will be good days and bad, beautiful moments and storms and you will be heading towards a distant horizon. Along the way, you will work with others and have experts to guide you.
Part 1 – Finding your direction
Without knowing where you want to sail how could you ever choose the right boat for your journey?
In my opinion, the most important question you need to answer is why, once you have a strong understanding of your why other answers will begin to fall in place.
A real world scenario
As an example, my most immediate goal is to create financial stability for my family, once I have achieved this I want to create a transitional housing program to help addicts to get off the streets and to create lives they are proud of. Knowing this it is much easier for me to evaluate my options and to determine which will help me move towards achieving my goals. It also makes it easier to avoid “shiny object syndrome” or to eliminate opportunities that will not benefit your long term purpose.
Some homework for you
Take a minute and think of what you are hoping to achieve from real estate investing. Family? Charity? Retirement? Every time you think you have the answer I want you to ask yourself why and write these ideas down. Keep going until you have all your reasons written down.
It really helps
Think of your “why” like a beacon, distractions will come up and you will face challenges but your “why” will make it far easier to stay on course.
Once you have a solid understanding of your “why” it is far easier to start developing a plan.
Part 2 – Building your boat
Now that you understand your “why” it is time to start planning out how you will make it happen. This step can be tricky as this is where you really start to see the options you really have. Personally, I have found that this discovery stage will happen as you search for industry professionals to work with. I put this first because I want you to be aware of your goals while you interview the people you want to work with.
Think about what you would like to do (own houses, private lending, buy apartment buildings ect) and how quickly you would like to do it. Do not worry about what is possible yet, just focus on your goals and how you want to chase them. The next step will be where you start to explore what options are open to you.
A little more homework for you
Take a minute to think on this and write down your answers. Each time you write an idea down I want you to consider if it will help you reach your “why”. If you really do not know where to start send me a message and I will help you through this.
Why does this matter for your real estate investing?
Understanding your why and taking the time the think about how you would like to get there is like a shield. As you explore the real estate investing world you will come to discover that most people have their own agendas. This is not good or bad but you should always be aware that others will influence you (whether intentional or not) and having a firm understanding of what you want will help you keep on track.
Part 3 – Gathering your crew
Once you know your destination (why) and have a rough idea of how you would like to get there it is time to build a team of experts who can help you understand the different routes available to you. The options you brainstormed in Part 2 will help you determine which professionals you need. As an example, for clients looking towards buying real estate I would suggest the following – a realtor, a lawyer, an accountant, and a mortgage broker. These four roles will help you find others you may need (such as insurance, appraisers, home inspectors ect).
How to tell the right person from the wrong one?
I suggest you interview your experts and ask a few questions – ideally, they will be working with you for years so take your time to decide.
A few questions I would consider asking someone you are interviewing.
- Do you work with investors regularly? Tell me about some of your recent investment focused deals you’ve done recently.
- What makes a “good deal” in your opinion?
- What is the biggest challenge you believe real estate investors face and what do you suggest to overcome this challenge?
- Outside of the “transaction” how will you support me?
The exact questions do not matter, what is important is that you ask open ended questions. Try to avoid anything that can be answered with a yes/no. The goal is to quickly determine if the person you are chatting with is a real estate investing expert and if you feel they are sincere and have your best interests at heart. I find these types of questions allow someone’s personality to come through.
What a professional looks for
For myself, I look for clients and experts who view our relationship as a long-term partnership. Whether getting up at 5 am on a long weekend for a client call, taking the time to break things down to a high degree of detail, or writing a detailed blog post to answer a client’s question, I am committed to helping however I can. Ultimately its a two way street, a little care and compassion go a long way! Having some one who is invested in your success and will go out of their way to try to help you succeed is a major advantage. Every relationship should be a win-win and I always suggest asking yourself how you can help others as well.
Part 4 – Taking action
Moving forward gets far easier once you have an understanding of your “why”, have started to explore how you can make your “why” a reality and have started to build a team of experts to support you.
These three steps will build a foundation for you to learn and plan from. If you create a trustworthy team you can learn, explore and grow while having allies who will support and protect you.
As an example, our goal at Kirkwood & Brennan is to show you your options, to break down your choices into pros and cons and to share our opinion of your options. We do not want to tell you how to do (as there is often multiple ways to move forward) but rather put you in the position to make an informed decision of what is best for yourself.
Why does this matter?
In my experience, I have found that once you have the right team surrounding you questions like where to invest, what to invest in, how to structure an investment or mortgage, how to position financing, and everything else that comes up becomes far easier. We may not have all of the answers for you but we certainly do know the right people to help you find those answers!
If there is anything Scott or I can do to help let us know.