Andrew Shader knows a thing or two about real estate. Yes, investing in real estate is exciting and potentially lucrative, but it’s not something to undertake lightly. Jumping into such a dynamic field comes with some inevitable risks. That said, it’s often the thrill of big rewards that turn first-time investors into long-term real estate enthusiasts.
You should set aside time to think through the logistics before committing to anything in life. Real estate investing is no exception to that rule.
When you’re considering your investment potential, there are various scenarios to evaluate and a few crucial questions to ask to determine your authentic level of interest. The following are just a few points to consider.
Can You Set Aside Money Now for Profits Earned Later?
While investing in real estate generally requires less overhead than one might assume, it’s essential to keep in mind that most property sales require a 20% down payment. That means you’ll need to have the right amount in your account before you can create momentum behind your business.
First-time real estate investors should spend time determining how long it will take to save for a down payment on a first property. Then, an investor must have the patience and dedication to make it come to fruition.
What Style of Investing Is Appealing to You?
There are different types of real estate investing styles out there, and not all of them work for everyone. Take a beat and consider what your investing style might be. This is an excellent chance to step into business with a more realistic financial outlook and solidify the expectations around your process.
For some, a sole proprietorship is the right choice. With this style of investing, you’re the only homeowner.
For others, a partnership in which you and others own a home together is a better fit with a bit more security. While syndication offers an option to be a more passive investor with others in a property, crowdfunding is an off-shoot of this method that takes the process to an online platform instead.
A real estate investment trust is yet another option to consider. This approach allows investors to buy shares that are sold by an ETF that might own multiple properties.
Are You Willing to Analyze the Market?
Many first-time real estate investors just want to get out there and start closing deals on day one. While that temptation is understandable, it’s important to remember that market research is the backbone of investment business.
Not only do investors need to take time to identify the property market they want to focus on, but they then need to commit to performing a thorough market analysis to make profitable decisions. You should consider population growth, area job growth, the average resident’s salary, and other elements when pinpointing potential markets.
You’ll Need the Help of Others
No matter how much you’re looking forward to working independently, the reality is that no real estate investor is an island. Finding superb properties and landing deals ahead of the competition requires a trusted and extensive professional network.
Take time to consider what you’re willing to invest in networking before stepping into this demanding field. From property managers and insurance carriers to lenders and major brokers in your market, you’re going to need to have some face-to-face time with them all to carve out your unique niche over the long term.
About Andrew Shader
Andrew Shader is an entrepreneur and a successful real estate developer and investor in Fort Lauderdale, Florida. He got his Business Management and Marketing degree from Florida State University. After spending years in the insurance industry, Mr. Shader decided to shift his focus to real estate. Andrew specializes in value-added properties and boosting property value through investment.