By Joe Lane
(Printed in the CREIA May 2011 News Letter)
While much has been done to crush the misconception, many still believe
that to be a successful real estate investor, you must either have a lot of money or
ﬁnd some one-in-a-million opportunity.
That is plainly not true, and while it may certainly turn out that making money through investing comes easier as wealth increases, all wealth has to start somewhere and the real estate investing arena is no different.
In the Beginning: the biggest piece of advice any real estate investor can have when just starting out is to invest carefully. There will be many opportunities as you get deeper into the real estate investing ﬁeld, but not all of them will set you on a path
toward prolonged success. The most successful real estate investors deliberated
carefully before picking an initial project, sometimes a hard thing to do when you
make your mind up to get involved in real estate investing.
What ends up being the case here is that you will ﬁnd a way to get involved in an investment without laying out your entire nest egg, though it will take some time. A common way to achieve that low-cost inroad is to partner with another investor on a particular property to get your feet wet and share the risk with another party. You may not see the huge windfall you’ve envisioned, but if you choose the right opportunity, you will see enough to continue your investing career.
Save, Reinvest, Rinse, Repeat
Investing is a cycle, and as you graduate from your ﬁrst real estate investing experience, the best thing to do would be to put your earnings away in savings and then take a portion back out to reinvest in a new project. The best investors make a strict habit of saving at least a portion of the proceeds of every investment to gradually build up a fall-back reserve should an investment go horribly wrong.
You will ﬁnd that most real estate investors make a serious commitment to saving and many never have a reason to stop doing so. While you will most likely run into a life event or investment hiccup that causes you to stop investing for a period of time, you will most likely see a rebound from that and begin again. Remember to save and reinvest your proceeds to continually beneﬁt from your investments.
It Will Get Rocky
Very few real estate investors make it through an entire career without having some hardship and difﬁculty along the way. For most situations, successful investors will tell you that riding out the storm and waiting out a rough patch is the best way to combat a low market or other investment malady.
Markets, just like so many things in life, are cyclical. If your investment looks dour for a time, you would be well served to wait it out as prosperity is likely to return. That may seem a little touchy feely, but look at the stock market for inspiration. Though there will always be dips in the market, there is eventually a peak to off set that loss. Maintaining a similar outlook of patience on your real estate investments will likewise typically pay off in the end.
Though it may seem like only the wealthy get wealthier, getting involved in real estate investing does not have to be as daunting as it appears. Just getting a foothold in the investment arena with a small deal at the onset of your career is likely to eventually grow into bigger and bigger investments.
Make certain that you save and remain level-headed as you go through your investment career and you will be able to speak from a position of authority when people ask you just how you did it.