There are many forms of investing that can lead to a passive income; however, residential real estate investing is versatile and brings a lower risk than other investments when done correctly. With patience and a few steps to create financial security, you can leave your day job and become a real estate investor. Let’s discuss the steps needed to make this happen.
Get Out of Debt
No one can comfortably begin investing while owing a lot of money somewhere else, especially if they have unsecured debt, such as credit cards.
Make a plan to slowly but surely nip away at debt. A little extra here and there can add up quickly and pay things off.
Create Emergency Savings
Creating emergency savings is a necessity for everyone (whether they’re investing or not). However, for the investor who may step away from a regular paycheck, it becomes a top priority.
Create an account with three to six months’ worth of savings. You need enough to keep the bills paid and groceries purchased. Hopefully, it won’t be used, but this money is there in case any initial investments aren’t what you expect.
Decide If Real Estate Is for You
Plenty of ideas sound great, but once we experience them, we find out they aren’t a good fit for us.
Study the ins and outs of real estate to make sure it suits you. Talk with friends who have invested or find helpful forums online where you can read other investor’s stories. Don’t wait until you’re knee-deep in real estate to find out it isn’t your thing.
Learn the Types of Residential Real Estate Investing
Education is important in understanding each type of investment possible in real estate and which investments will best suit your needs. Here are a few common types of real estate investments:
Wholesale
This is the process of acquiring a contract from a seller (through a purchase usually under market value) and, in turn, finding another investor to purchase the contract at a higher price, giving them the right to buy the property. Wholesale buying requires a lot of time searching for leads, but little cash is needed to get started.
Flipping
Flipping, by definition, is when you purchase a home as an investor with the intent of making improvements on the property and then selling for a profit. This is easy to get into as long as properties can be purchased without too much debt and you can do a lot of rehabbing yourself.
Rental Properties
This is the process of purchasing residential real estate to find tenants and collect rent. Rental properties provide a great way to a quick passive income; however, rental properties require upkeep and attention.
Business Plan
After understanding the different forms of real estate investing and feeling certain it’s for you, you must create a business plan to keep yourself on track. Your plan should state your steps for investing and the steps needed to reach your immediate and future goals.
In conclusion, once you follow all of these steps and begin getting a return on your investment, you will see a light at the end of the tunnel and a successful goal being fulfilled toward financial freedom. Soon, you’ll be leaving your day job and becoming a real estate investor.
