Many real estate investors when they are just beginning are overwhelmed. The one thing they know for sure is that they want to take control of their financial future. However, once the decision to take your financial future into your own hands has been made, what should you do next?
This post is the first in a four part series that will address the fastest way to get started as a real estate investor. This quick start guide will outline the absolutely critical steps in establishing your investing career. They are:
- Understanding Real Estate Cycles
- Identifying the Key Indicators in Your Market
- Building Your Power Team
- Making Offers
- Finding Financing Sources for Your Deals
- Implementing Finding Strategies
- Understanding Exit Strategies
- Constantly Learning and Mastering Your Craft
Today, we’ll deal with the first two.
Step 1 – Understanding Real Estate Cycles
The reason that we put this step first is that you are going into investing blind without an understanding of how real estate cycles work.
You must understand how the real estate cycle changes and the variables that cause it to change. You must also understand how financing changes as the cycle shifts. In addition, different investing techniques will work better than others under certain market conditions.
While there are undeniable national trends in real estate, local market conditions can vary greatly from location to location. You must spend the time getting to know the specific real estate market where you want to invest or you will not be properly prepared.
When you have the information about real estate cycles and how they function, you can begin to lay out a game plan for investing. You will know what strategies are likely to be best for your market.
Step 2 – Identifying the Key Indicators in Your Market
This step is very closely linked with Step 1. In order for you to truly understand what is happening in your market, there are some statistics you need to examine.
- Jobs Coming In
- Occupancy Rate
- Rent Incentives
- New Units Permitted
- Inventory for Sale
- Average Days on Market
Since supply (homes for sale/for rent) and demand (people coming into the area) are the factors that push the cycle from one stage to the next, you want to monitor these indicators closely.
By staying in touch with these statistics, you will see changes coming instead of being blindsided by them after they have happened.
Next time, we’ll talk about building your power team and making offers.
By Mark Justice
Rich Dad® Education Elite Training Mentor