Investing in real estate can be a financially rewarding experience. While it’s possible to become a successful part-time real estate investor, it’s true that the more time and energy you dedicate to something, the more likely you are to succeed. Property investment is no exception. Most new investors don’t know how to make the leap from a part-time side job in real estate to investing full-time, but the good news is that it’s possible as long as you’re willing to put in the work.
Here’s what you need to know about going from a part-time to a pro real estate investor and how to know if you’re ready to make the transition.
Know What You Want
You wouldn’t apply for a new job or change careers without thinking it through. Real estate investment isn’t any different. If you’re serious about making real estate your career, you need to commit to it just like you would any new venture. Investing in one property at a time is doable as a side gig, but once you start taking on two or three (or more!) investment projects at once there will be a lot more demands on your time. You’ll need to give it everything you can to ensure that each project is a success. Be sure you’re ready for this kind of commitment before you quit your day job.
Have a Plan
Once you’ve decided you’re committed to a real estate career, it’s time to plan how you’re going to achieve it. Think about your short and long-term career goals, and how you’ll make them a reality. Most importantly, be realistic about what you can afford, and how you will obtain financing. Be clear about what you’ll do if an investment fails, and also work out how you’ll manage profits from successful properties.
Just as you need a business plan, you need to know everything you can about the real estate industry. You should know what investment strategies are out there, and how to choose the one that’s right for you. Make sure you understand what laws you’ll be subject to and how the industry’s regulated.
Some investors start by working in a real estate job, such as mortgage brokering or interning for a successful investor, to learn everything they can about the industry before taking on financial risk.
Getting to know other investors is a great way to learn first-hand what works and what doesn’t. They’ll be able to share advice with you—and maybe even throw some opportunities your way. It can seem like you’re in it alone when you’re investing in real estate so having connections and friends in the industry will go a long way to making you feel more confident.
Don’t forget the rest of the industry, either. Agents, brokers, lenders, and others in the real estate business can be invaluable to stay informed about how the industry’s performing, get tips on the best deals in the area and manage your growing portfolio.
Once you’re ready for that first property as a full-time real estate investor, it’s time to pick a strategy for getting cash to invest. There are many ways to get started, and you can always test out a few options to see what works for you. The most common options are:
Wholesaling lets you locate good deals and sell them on contract to investors. You’ll learn how to identify good deals and how the market’s performing—all with no financial cost to you.
Fix & Flip
When you flip a house, you buy it, renovate and improve it, and sell it for a profit. While flipping homes isn’t easy, it’s a good way to learn about assessing risk and how to devise a property strategy from beginning to end.
Unlike a fix and flip where you only own the house for the period of time necessary to renovate and sell it, when you purchase properties to rent out you’re choosing the long-game. Renting properties is a great option if you’d like more income security since you’ll generate a monthly rent payment so long as you have a tenant.
The Bottom Line
Moving from part-time to professional real estate investment isn’t easy, but it’s possible so long as you’re willing to do your research, devise a strategy, and take the time to choose your investments wisely. When you’re ready to make the leap, First Capital Trust Deeds can help you find financing for your next investment.