How to Become a Real Estate Investor: The Ultimate Guide

Juliet D'cruz

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“Safe as houses” is an expression much used in the UK, and you can understand how it came about. Investing as a whole can be a risky business. Rather than leaving your money in a bank, having it working away for you is appealing, however, the idea of losing it is enough for most people to play it safe.

However, time and time again those who have learned how to become a real estate investor have benefited from dipping their feet in the warm waters of property investment.

Markets may fluctuate and stocks can fall after a single tweet. But people will always need somewhere to live.

Are you interested in becoming a real estate investor? For many real estate investing seems like a mystery, but we will break it down for you. You may even be able to start right now!

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Don’t Forget the First Step in How to Become a Real Estate Investor

If you’re thinking of how to become a real estate investor there is one thing that should be done before anything else.

Stop and think about what kind of real estate investor you want to be.

What do we mean by that?

Well, are you somebody with a lot of free time that enjoys the idea of getting your hands dirty? Would you love to see a derelict property turn into a cash cow, and don’t mind dealing with tenants?

For many, this is real estate investing. Watching TV shows and knowing friends that have properties has led many to this idea. But if your main driver is just to diversify your portfolio, then becoming a real estate investor may not have to involve the traditional route.

Just as there are many ways to invest in general, be it through stocks shares bonds, or even crypto, active and passive investing is possible within the world of real estate.

Passive Real Estate Investing

The first option in how to become a real estate investor passively is by joining a Real Estate Investment Trust (REIT). These are managed much in the way stocks and shares are, in fact, some are publically traded.

You simply buy shares in a trust, whose role is to source and manage properties using the money provided by investors. These are usually shopping malls commercial buildings hotels end of high revenue-generating properties.

Alternatively, you can also invest in a real estate mutual fund working in the same way any mutual fund operates. A fund manager oversees the finance side of things end you are safe in the knowledge that a professional analyst will take control over choosing properties will see the best return on interest.

Do you want to know the great news about this? These are both ways in which you can start real estate investing today without the need to save for a deposit or have a large stash of savings!

Active Real Estate Investing

For an active investor, the most common routes to real estate investing are buying and holding a property flipping.

Each of them requires a different skillset, so it is important to know how much time and energy you are willing to put into it.

Most of the energy, if you are into buying and holding, goes towards good market research and your own personal finances. As this is more of a long-term investment, it is vital are you get it right.

Is where you are looking an up-and-coming area or an established hotspot? Do I have the funds to cover all the additional fees that are included? Most mortgage lenders expect a 20% down payment, but you also need to factor in repairs, maintenance, vacancy costs, and more.

Buying and flipping are perfect for individuals that are willing to take on real estate investment property that needs renovation and more importantly, have the expertise and connections to do it cheaply and quickly. While TV shows can make it seem easy, there is a real skill in doing it right. Getting it wrong can be a very expensive mistake, so flipping is not for the faint-hearted but can generate great profits.

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Lay the Foundation

As we’ve seen, just deciding what type of real estate investments you want to make opens the door to a whole new world. So, the next logical step would be to get familiar with as much as you can about real estate.

This is one industry where knowledge is power. Fortunately, much of that knowledge is either free or very easy to attain. There are countless books, online courses, and even YouTube videos that can help you to understand all you need to know about the type of Real Estate you are interested in.

So much information out there can sometimes seem overwhelming. That is why it is so important to have a clear strategy from the beginning.  Once you know what type of real estate investing is for you, then you can focus on what information you need.

Remember that whether you are buying renting or selling, everyone wants a better deal than you.

The best way to protect yourself from being taken for a ride is knowledge. Learn about what fair prices for property in an area are, the local landlord-tenant laws, how long it would take to renovate a property, and how much rent to charge. These details are the difference makers in whether becoming a real estate investor will make or cost you money.

Another way to speed up your education is to speak to other investors. Online forums and networking events are great to find out where you may be going wrong as well and provide you with potential new opportunities for business.

Rome Wasn’t Built in a Day

Learning how to become a real estate investor is a really exciting prospect.  As we have seen, anyone can do it. While it may take time to see results, getting it right provides much-added security, something that all of us desire.

We hope our breakdown of what you need to know to get started helps you on your way to making it big. To stay ahead be sure to check out our other informative property posts on our site!