Originally posted on 4/25/16 by John Dessauer
Starting from rock bottom can be tough for the new property investor, especially if your knowledge and experience are limited. Realize it takes some time to gain experience and build your investment portfolio. Give yourself sufficient time to learn the rules, the lingo, and avoid costly mistakes. Don’t be in a rush. So, beyond getting educated and finding a mentor, these five things will help build a good foundation.
Fix Your Credit
This should be one of the first things to do if you are serious about property investing. Even though there are strategies, where you don’t need to have credit or event good credit, you still want to take care of this. Why? It offers more options to you. You don’t want to wait until you approach a bank for a loan to finance your first property investment only to find out you don’t qualify. Get a copy of your credit report and find out your rating. Check and see if it contains erroneous information that could be detrimental to obtaining credit in the future. If there are errors on your report take the necessary steps to have them removed as soon as possible.
Get a Savings Plan
Using your own money is not a necessity, but it is good practice for you to do. How you run your own financial life, is an indication of how you will run your investments. In preparation for applying for your first loan make yourself look good on an application by reducing your overall debt and putting money into a savings account. It’s no secret financial institutions favor clients with savings accounts. Explore the option of setting up a budget to help you save as much money as possible. When you begin to make money as an investor, be sure and save as much of your profit as possible to reinvest into your business.
Make an Investment Plan
When just starting out as an investor, it will be beneficial to create your own personal investment plan in order to plot your path to success. You will need to list all of your goals and any ideas you may have. For inspiration, you can check out free business plan samples on the Internet. Stick to your plan as closely as possible in the beginning, but as time goes by and you learn and gain more experience, your overall investment plan will probably change and evolve.
Make a financial plan as part of your investment plan. Define how much money you can afford to spend on your first real estate investment, how much of a down payment is needed, and the length of the loan needed to finance the property. Calculate how much profit the investment property needs to generate in order to pay the mortgage and tax payments.
Find Your Own Personal Strategy
The next step is to discover a working strategy that you feel comfortable with and best suits your personality. Everyone has their own strengths and weaknesses, the key is to find a way to utilize your strengths. If you are not at your best when meeting new people, but enjoy writing emails, use that form of communication to contact new clients. Working the way you enjoy will greatly facilitate your journey to becoming a successful property investor.
Choose Your Niche
In the beginning, increasing your knowledge will speed your progress toward the goal of financial independence. However, be aware the field of real estate investing is so vast it may be impossible to become a total expert on every aspect. When just starting out, it’s important to focus on just one area, such as rentals.
“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer