5 Essential Real Estate Investing Tips for Beginners

If you're like most people, the dream of becoming a real estate mogul probably sounds pretty sweet. Who wouldn't want to own a few homes and rent them out, watching the profits roll in? The reality is that real estate investing isn't easy. It doesn't come with a map, and the road to riches is often winding. That being said, there are things you can do to put yourself on the right path and ensure your best chances for success.

1. Listening to real estate professionals and successful investors is a great place to start

Whether you're new to real estate investing or going on your third income generating property, internet is filled with great nuggets of advice and interesting perspectives. Find a mentor that not only has great feedback from their student, but also who resonates with your goals and your ideal lifestyle vision.

2. Do your research

One important tip that many experienced investors swear by is doing your homework before making any decisions. This means learning about the different types of real estate investments, understanding the risks and potential rewards involved, and knowing your own financial situation inside and out. It's also crucial to have a clear idea of what you hope to achieve with your investment and how much time you are able to dedicate to the process before you even start looking at properties. It is easy to get excited about opportunities, but someone still has to do the work to analyze deals and evaluate risks, and if you can’t dedicate 100% of your time and energy to the process, it could be worth it to look for people to work and partner with.

3. Know that real estate investing requires patience

I will be the first one to tell you, from experience, that great deals, just like relationships, take time. Another key piece of advice is to always remember that real estate investing is a long-term game, or at least it should be. There are too many uncertainties in the short-term outlook, and if you try to succeed this way, you will end up spending too much time trying to “time the market” instead of focusing on the basics and foundations of what a great deal looks like. There are quite a few things you need to know before investing in the US as a Canadian, that’s why patience is essential, as rushing into things can often lead to costly mistakes. It's important to take your time, do your research, and make sure you're comfortable with every decision you make along the way.

4. Do not over-leverage yourself

Over-leveraging is a real danger for anyone in any type of business, especially, in the real estate business. As Corey Chappell warns, "You can be very successful for a long time and still go broke if every rental mortgage to the hilt". It's important to have some properties that are free and clear so that you have a cushion in case of vacancies or dips in cash flow. By over-leveraging, you're putting all your eggs in one basket, leaving no rooms for uncertainties or mistakes, and hoping for the best, and that's never a good idea. So be smart about your real estate investing, and don't over-leverage yourself. It could mean the difference between success and failure.

5. Have an emergency fund in place or people that can help

Any seasoned investor will tell you that a rainy day fund is essential when it comes to real estate investing. Unexpected repairs and maintenance costs can eat into your profits, so it's important to have a reserve of cash to draw from in case of an emergency. As a general rule of thumb, experts recommend setting aside between 45-55% of your gross rental income to cover annual expenses. This may be higher or lower depending on the rental market you're in, but it's always better to err on the side of caution. By having a rainy day fund in place, you can rest assured knowing that you're prepared for whatever comes your way. Also, having people you can reach out to for help or to work on new deals is crucial, so it’s never a bad idea to grow your network with like-minded folks.

Real estate investing may not be that easy but with courage, time, and continuous learning, you can build up that portfolio. If you think you have what it takes to be successful in this industry, get started on your real estate investing journey today! And if you are interested in what I’m up to or working together - Let’s Connect!