Capital to invest in real estate must be carefully planned for
In this time and more than ever before, I wish that people knew and understood that creating the capital to invest is actually a part of the process of starting your property investment journey.
You all know that you cannot invest if you do not have the money but so many of you also so very easily give up on investing because you do not have the money.
And this is one trap that even I was caught in when I first started out as a real estate consultant (you do know that I started at the bottom of the ladder too, right?) who could, should and would have started investing so much more much earlier than I did.
As with everything in life, finding the capital to invest in real estate also has a process and one that especially starts way before you actually start the investing with your initial deposit being paid.
To understand it easier, you could think of the process like you would when you were going on vacation – when we think of going on vacation we immediately and subconsciously make an estimated budget for how much that would cost us and then also plan for where the money will come from.
The same is expected of investors for real estate.
See guys, even people who have money – no matter how they made it will want to “be careful” about how they spend it; yes, careful is used relatively for all purposes and intents of this article. Being careful would also include spending it to feel good – but, I digress so let’ go back.
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And because the more common discussions about investing in real estate require a lot of capital, being careful about how their money is spent will always be the response gotten by investors unprepared for real estate.
Irrelevant of whether you are an investor or an industry colleague, understanding, embracing and appreciating this fact will make life easier for you.
So, if I were to break down the process for which you can prepare to start investing in real estate, these are what the pillars for getting the capital to invest in real estate would look like.
- Create the money – the more consistent it is, the better you are in a marathon not a sprint. As mentioned earlier, investing in real estate for good returns can be capital intensive for the following:
- If land banking – you have to buy an expanse big enough to make it worth the while and money invested in the venture.
- If buying to resell – you likely have to refurbish before selling or buying from pre-development stage
- If buying as an investment property – you need not only the cash to pay for it but to perfect the finishing to your taste as well as furnish it (if required)
- The cost of investment is more than just the cost of the asset – there are fees and taxes that come with this.
Do you see the money piling up? Hahahahahaha!! That is why this step is a part of the process and in some cases, it’s the most important one.
Next up is knowledge
- Understudy the market – find out what it needs, analyze where it is going and figure out what you think you want to be a part of. There are quite a number of aspects and every investor needs to know what aspect can fulfill their goals.
Other elements of understudying the market to find a niche that suits you include knowing the:
- Investment cost: even if you are creating the capital, you should have realistic limits to stick to unless you will not succeed
- Timeline to potentially turn a profit
- Possible payment options & plans
- Hire a realtor/agent and a lawyer to work with you to achieve your goals.
This in many cases is where a lot of people have the worst experience and find themselves in a rut. Not having an expert to guide you on the actual market dealings can make your experience more hectic, longer and feel like an unworthy circumstance.
Whilst many investors would say “but I have a realtor working for me”, the actual question is “Did you hire that realtor working for you?”
A realtor whom you have hired will work concertedly for you, one that is just working with you will do so but only for the deal/money and not necessarily with your best interest at heart.
PS: This applies to lawyers too – I have heard some really concerning offers from lawyers that are supposed to be acting in the interest of the client.
If you are an existing investor, which of these steps did you skip and looking back on your journey, do you see how it could have been easier for you?
I would love to hear back from you so email me here.
You may also download her free ebook on real estate here