Have you wondered what steps you should take to become a real estate investor? Investing in real estate is a great way to build wealth and achieve the American Dream. You know – actually being able to live an independent lifestyle. Real estate can produce income while you sleep at night. Your day job, on the other hand, only pays when you’re there!
Smart Steps to Take To Become a Seasoned REI
The Number 1 and top consideration in learning to invest in real estate is your exit! “Huh”?, you may ask. You just said it was a good way to make extra money and develop a continuous income stream. Why, would I want to exit that?
One reason that real estate offers you the opportunity to get ahead is that it comes with a degree of risk. You know no what they say . . . “no risk, no reward!” Well, it’s true. FYI – if you don’t believe there’s risk in being a real estate investor, then please call us. We have some fabulous land deals for you really cheap! We also can sell you some wonderful rentals!
The flip side of risk is the great part, the financial reward! You can make serious money in REI! So it is mission-critical to build a back door for you to go out should the venture fail. This doesn’t mean you intend to fail as a real estate investor! But, if the stars don’t align in a favorable way for you, there’s a game plan and strategy ready to use.
Set Up Your LLC Before You Buy A Property
The exit strategy is to separate you as an individual from the risk. If the deal goes bad, then you don’t want it affecting the old personal savings account or other assets you have. Smart investors limit the risk by using an LLC.
The concept is like buying Apple stock. Suppose you buy 50 shares of Apple at $190 each. You have a risk exposure equal to the amount you spent (50 x $190 = $9,500). No matter what else happens, the most you lose is $9,500. If Apple files for bankruptcy the next day (we know that’s not going to happen), you have a cap on the amount you can lose.
Now apply the same strategy to real estate investing. Start your LLC, fund the new company, and keep the risk to a reasonable level. You control how much you are willing to lose if things don’t go the way you plan.
Here’s why it’s wise to develop your exit strategy. If this deal doesn’t work, you don’t want it following you around forever. You want to limit the exposure you might face. What’s better, if the venture skyrockets and you make a bunch of cash, then who’s the lucky owner of the LLC?!
Do Your Homework; Find A Great Deal on a Property
You have your exit plan and have limited the downside so now you need a property. Well, it’s step 2 in a big-picture view. You have to find a project – one you can add a little creativity, elbow grease, marketing, and maybe even some sweat! You have to locate a property that will make you a profit.
Once you have performed the necessary due diligence that every real estate deal requires, then act on it. This can be the scary part and especially the first couple of times. REI is not for the faint of heart. You have to take the step and make things happen!
Execute Your REI Plan
You did your research, you bought the property, now it’s time to follow out the details of your plan. If it’s a flip, then you better grab the paintbrush and get to work. If you opted for a buy and hold, then get the place rented. However, you planned to make money with the property, don’t delay! Hey, if you haven’t heard, time is money! Stop sitting here reading this blog! Okay, finish reading, then get to work!
Do It Again!
You made enough off the first transaction to get a taste, a wonderful flavor of what it could be like to be your own boss or make money on the side. Well, it doesn’t have to end here. You need to find the next deal and go back through the steps again.
The good news is that every time you invest, it gets easier! Hey, it’s like your day job. When you first went to work, you probably weren’t as efficient as you are now. The same is true with REI. The first flip, the first single-family, initial commercial, mobile home park – you name it – there’s always a learning curve. But every time you do another one, you get better, faster, and figure out how to streamline your processes.
You Can Succeed – But Only If You Try
In review, if you want to become a real estate investor, you have to have a plan to succeed. The first step is your exit strategy in forming a legal and valid LLC. The second phase is “do your homework” before you buy – you can’t make a bad deal good! Third, make your plan work (this means you better “git after it!”). Then, just do it all again and again – making as much as you want!
Oh yeah, don’t forget to stop occasionally to enjoy a little of your financial success and the freedom that comes with it!
If you have questions about LLCs and arranging your affairs to limit your liability you can call us to find a convenient time to meet and discuss your needs.