“Can you tell me how to get into real estate investing?” is one of the most common questions I ever get. My FIRE strategy is tightly revolved around real estate, so once you ask – you won’t get me to shut up. In fact, I think everyone should own a rental as an investment. (And not some REIT stuff either, I’m talking real homeownership.)
The annoying part is that everyone is always looking for some “strike gold” strategy instead of following the basics. But if you’re serious about investing for the long term, here’s your no-BS “how to get into real estate” guide.
More Resources about getting into real estate Investing
- Why it’s good to invest in real estate at all.
- Check out my real estate portfolio: I update it annually, with all the details
- 2022’s Best Property Management Software for <20 Units
- The trick to managing rental properties easily
- Rent to own homes are a neat method to get into rentals
- Sandwich lease: Why you should walk away if you hear this
- Turnkey real estate – Everything you need to know
- Real estate investing: low-income housing. The trick to actually make it work
- Long distance real estate investing isn’t hard: All of my houses are far
- Real Estate Quotes for a little motivation
- Best Real Estate Investing Courses: They pay for themselves!
Step 1. Stop being scared. You already “get” real estate.
You have been a tenant in your life so unless you’ve been living in the deep woods your entire life, you already get the gist of investing in real estate.
You buy a place, and you rent it out for money. Ta-da! That’s basically the whole process. Sure there’s a learning curve, but it’s kind of like riding a bike. It all feels like a big deal until it doesn’t.
Yes, repairs can be annoying, but there’s no problem that hasn’t been solved before. Plus, if you do your due diligence before buying the place, you won’t bump into any savings-draining surprises.
And yes, mortgages can feel intimidating, but it’s not rocket science. If anything, people make it look complicated on purpose – but mortgages are the real reason why it is good to invest in real estate.
Step 2. Get real estate fluent.
Okay, so you now understand the whole tenet of investing in real estate. (Buy a place and rent it out.) But don’t just buy the first place that pops up online and hope it all works out. The numbers have to make sense. Namely, you should at least be breaking even between your rental income and all your expenses.
As a little side note, the numbers DON’T work out that way where I live, which is why I’m all into the whole long-distance investing thing. In fact, I bought my first home IN ANOTHER COUNTRY while still living in a tiny rental apartment.
Why did I do it that way? I was doing my research, I was sitting on the decision, but at some point – the numbers just MADE SENSE.
So how do you know if the numbers make sense? Start window shopping!
Do your research! Start looking at homes, home prices, what your mortgage, insurance, and property taxes will be, and how it compares to the rent. And don’t discriminate! Diversify where you look. I have rentals in 4 different states and two countries!
This is actually where signing up for the Roofstock mailing list or some other online real estate platform would come in handy to get those numbers right into your inbox. Then, once you feel somewhat fluent, you can start talking to real estate agents.
For any given area, pay attention to home prices, expected repair costs, and typical rent and returns. Just getting a feel for those numbers in the coming months will help you intimately understand what’s a good deal and how to get into real estate.
If looking up these numbers gives you ulcers but you still like real estate you can get into:
- Crowdfunded real estate (for easy, low liquidity, high returns type investments)
- Managed farmland investments (for rock solid, recession and inflation proof investments)
Step 3 – Save up.
You can’t ask how to get into real estate if you have no money. (Actually, there are many methods of how to save for a house)
Seriously! So many people have money backwards! They either let themselves be all spendy once they start earning, OR they think when I have real money – that’s when I’ll save.
No. No. No. No. No.
You’ll never reach financial awesomeness if you don’t get your financial goals right and learn to save money fast then invest that money to build your downpayment.
While you’re getting fluent in investing (Step 2) start saving aggressively for your down payment. Even try to negotiate your rent to get a feel for the rental world of managing rental properties.
How to get into real estate: Steps 4 – 6
4 – Take a course.
If the concept of “just buy a house and rent it out” seems too simple to work, maybe you just need someone to hold your hand as you figure out the details. You can use my 9-year real estate portfolio as a starting guide, but honestly, I’d recommend taking a real estate course.
Taking a course lets you accelerate along your learning curve instead of dead-stopping every time you get confused. That’s more annoying than being stuck in a freeway traffic jam while watching cars zoom by on a parallel country road.
They’re pretty affordable considering you’re about to drop tens of thousands of dollars on a downpayment to start your investment in your real estate journey.
5 – Start with a house hack.
What’s a house hack? It’s when you reap the benefits of investing in real estate but you’re still not yet a full-on landlord.
Namely, try renting out part of your own home while still living in it. The best way to do this is with a quadplex but a duplex is good too.
You could also buy a rental before even owning your own place – as long as you can live somewhere cheap.
6 – Buy just one house.
When you start learning how to get into real estate, you can get carried away as easily as a chubby kid covered in sunscreen on a water slide. Except with money.
I mean, when you start looking up turnkey houses you will see a lot of what look like awesome deals, it’s hard to say no. You can try expensive homes (amazing), rent-to-own homes (they are ok), low-income housing (pass), sandwich leases (god no), and long-distance real estate investing (I do it!).
But buying a house is plenty of investment to digest for a number of years. You have to get used to it, let things even out, sort out your property management techniques and property management software and see if this is the life for you. Once you know you like it, take the money you’ve earned from your real estate investment and go crazy! (On another house, not on being Mr.Spendy-pants!)
FAQ – How to get into real estate
Is getting into real estate worth it?
To get the most out of your real estate investment, buy a rental. Find an area with high rental values but lower home prices, save up for a downpayment and keep an eye out for a great deal.