You’re fresh out of college, looking to start a business of your own, yet — like many other men and women of your generation — you are haunted by your student loans and outstanding college debts. Well, you’re neither the first nor the last Millennial to bump into such a predicament; it’s not a brick wall, there are other ways around it.
Real estate investing, for instance, deals with a lot of debt management. Yet, with some light research and investigation, you’ll not only become better at it but more confident as well.
So, without further ado, here are a few essential tips to get you started.
Learn the Real Estate Lingo
Every industry has its own jargon — including real estate. Before making your first purchase, take the time and follow a few real estate blogs, read some books on investing, and get to know the language associated with real estate — and investing in general — first. That way you’ll not only be more prepared but more confident as well; fear of the unknown is the worst. Still, don’t overdo it. Delving too deep and overanalysing the whole situation will only give you cold feet. Learn just enough to get yourself started and then slowly build up your knowledge from there.
If you don’t have the time to read all of that material, either find a mentor to teach you the ropes of the trade or look for some educational podcasts to listen to while commuting.
Raising Capital
The reason why they are so few female investors is not that women make bad investors, in general, it’s because women are more hesitant when it comes to investing money than men; particularly money they don’t have. In essence, real estate investing warrants the use of loans and equity to acquire property; this can make women interested in real estate investing rather nervous. Well, don’t be.
Getting a loan is not as hard (or bad) as it may sound; it all comes down to how good your credit history really is. Now, seeing how women generally save up more than men (and stack up on cash), this shouldn’t be a problem. Look for a free online credit score comparison checker and examine the different scores you get for your creditworthiness to get to the bottom of your loaning capabilities.
After that, it’s all about improving your overall credit score — by making timely payments and paying off any outstanding debts — and cross-checking the results.
Understanding Cash Flow
When it comes to real estate investments, you need to understand that the majority of your revenue comes from rent income; not land appreciation (that is just icing on the cake). Therefore, your main objective should always be to find properties where — after subtracting relevant mortgage and maintenance expenses — you are operating in the green. Over time, your tenants will pay down your debt, and due to your positive cash flow, you’ll be able to buy property number two. After that, the income generated from these two properties will create a snowball effect that will make it easier for you to get even more properties, etc. By the time you get to double digits with the number of properties you own, you’ll be able to pay off the mortgage on your first property, and so on.
Diversifying Your Investments
Since your income comes primarily from collecting rent, you don’t have to worry about land appreciation (and market value) as much. Still, you need to think of the long term. If some of your properties are giving you more trouble than they’re worth, consider selling them when the market balances itself out and reinvest; it’s no use sitting on a bad investment (income-wise).
Now, for this strategy to work, you need to start diversifying your investment types. That way, if one of your investments fails, you’ll have a potential buffer zone to provide additional cover for all your expenses. The most common investment types include single-family homes, multi-family homes, mobile homes, duplex apartments, and more.
Additionally, once you gain a few more residential properties, consider purchasing commercial properties as well to further diversify your portfolio and stay on the safe side.
Building Your Dream Team
The real estate investment business will take its emotional toll on you, eventually; it’s a highly stressful market. Yet, you’re not alone in this world. Managing multiple properties all on your own is not only time-consuming but also a horrible idea in general. Instead, you need to build a team of responsible people you’re comfortable working with that you can also trust.
Still, finding reliable real estate agents, contractors, and management companies is not an easy task; especially if you spread yourself too thin and expand your business to more than one location. Though, once you do find them, you’ll bring a lot of value to your team as they come with their own contacts and knowledge about various contractors and experts you’ll need for your business.
As was the case with a lot of women investors before you — fear is your greatest enemy. Conquer it, and you’ll conquer investing as well.
