Tips for Getting into the Real Estate Industry
Getting into real estate isn’t always a clear path. You could work as an agent, representing others; or participate as an investor, buying, rehabbing, and selling properties or holding on to them to generate rental income. These tips for getting into the real estate industry may help you focus on the role in the real estate business that’s best for you.
Know Why Real Estate Interests You
Approach get-rich-quick schemes with a healthy dose of skepticism. Success in the real estate business depends on treating it like any other business—not a hobby or a side gig—and it requires time and hard work. Before you start thinking about whether you’d rather represent others as a real estate agent or invest in properties to flip or rent, think about how you intend to spend your time in your real estate venture.
Even if your intention is to simply let your money participate, as in a REIT, real estate-related mutual fund, or crowdfunded investment, you still have to pay attention to market conditions and watch performance closely. You’ll have to deal with the tax implications of your purchases and sales along with your gains and losses in every transaction.
Take an Honest Inventory of Your Skills
Sit down and think about your skills. The real estate business requires marketing, financial, and organizational skills, as well as attention to detail, a commitment to continuous learning, assertiveness, and networking. Ability with numbers and relationships with banks, contractors, and tradespeople are all important, and integrity and honesty are essential. Decide whether you like to work for others or on your own, managing your money while property managers take care of the day-to-day operations of your rentals.
Take the Course and the Exam
You don’t have to have a license to invest in real estate, but you do if you intend to be a real estate agent. By taking the course and earning your license, you’ll get a good grounding in the principles of the business, an understanding of everything involved in buying and selling real property, and professional credibility. Agents adhere to high ethical standards and all legal requirements that apply to buying and selling property.
Agents must work under real estate brokers, who have earned a higher level of licensure, usually after a few years of work as an agent. The broker manages several agents, ensures their compliance with real estate laws and regulations, and takes a cut of their commissions.
BRRRR
Most places, this means, “Man, it’s cold outside!” In real estate, it means “buy, rehab, rent, refinance, repeat.” It describes a lifecycle for building a real estate investment portfolio of rental properties. First, buy a property, fix it up, rent it out, demonstrate that its value has increased, thereby increasing your equity in the property, and refinance. The rental income pays for the new mortgage and frees the investor to seek the next property to repeat the entire process.
Another tip for getting started in the real estate business is to avoid being taken in by common misconceptions about real estate investing. It’s possible to start small, even with no cash at all, and build a business one property at a time.
Whether you seek licensure as an agent or income from investments, do your homework, learn the market, and commit to staying current with market conditions and real estate laws, and you’ll be off to a good start in the real estate business.
