Many people interested in having a little more freedom look to pursue real estate. Whether you’re interested in being an agent or investing in properties, it can be an excellent way to make money and maintain the flexibility of working from home.
Before you begin this journey, however, there are a few things you’ll need to do.
1. Hire a Lawyer
You likely won’t understand all the laws and legal proceedings in real estate, even if you’ve earned your real estate license. What’s more, you could run into serious problems like deposit disputes from your renters or contract disagreements. That’s when you’ll need the help of a professional.
Having a real estate lawyer on retainer will add a protective layer to your investments as well as combat wrongful claims. When you’re dealing with hundreds of thousands to millions of dollars worth of investments, it’s always better to be safe than sorry.
2. Understand the Financial Requirements
There are certain financial considerations that must be made before jumping into real estate. First, you’ll need to come up with capital. Though there are ways to invest in properties for less than $5,000 down, it’s best to have at least a 20 percent down payment to guarantee a low interest rate and a high return on investment. This will require some savings.
You’ll also want a healthy nest egg for the costs of running a successful real estate business. Most importantly, prepare for potential repairs and maintenance. These will be unexpected costs that could put you out of business if you’re not prepared to cover them.
Generating adequate funds for your property ventures will require strict budgeting, a potential second source of income, and loans. Discuss your options with a financial institution to determine whether or not you’re ready for this investment.
Knowing people in the business will give you a handy boost. Compile a list of contacts in the industry and narrow down a few viable mentors. Brokers, assisting real estate agents, area landlords, successful real estate business people, inspectors, appraisers, and other industry professionals can also make valuable additions to your networking profile.
After you’ve compiled your list, set up some information interviews. You might ask about their daily routines, common pitfalls, and any advice they’d give new realtors. This is one of the best ways to get an accurate picture of a real estate business.
You’ll also want to spread the word to friends and family members about your ventures. If you’re looking to buy/sell houses or fill rental vacancies, you want as many people to know about your services as possible.
4. Get Licensed
Even if you’re planning to use other real estate agents, it’s still a good idea to get licensed as an agent in your state. Every state has its own set of requirements for becoming a real estate agent. You’ll want to do a little research and set aside ample study time before taking the exam.
5. Make It a Business
A common and disastrous mistake that beginning investors make is treating their real estate business like a side job. If you’re determined to make good money in real estate, you must treat it like a business.
First and foremost, this means writing a solid business plan. It can be less than a page, but you should write out all the details of how you’ll get your funding, remain profitable, and any action plans that will get you there. Look at examples and consult with your network of professionals before getting started.
You might also consider incorporating your business. Incorporation may not be necessary if your venture is small and you want to keep it that way, but if you’re looking for growth and acclaim, incorporating the business is a very important step.
6. Get Yourself Out There
The next step is putting yourself out there. These steps will prepare you for starting your business, but it’s ultimately up to you to make it work. You’ll learn more tips and tricks of the trade by practicing than you will by reading up on the theory.