The Guide to Investing in USA – Beginner Real Estate Investor
For a beginner real estate investor, buying properties is one of the best ways to start a business and become your boss.
Getting started is easy.
Buying a property is not that hard if you have saved up a 20 to 25% down payment, are gainfully employed, and able to secure a 30-year mortgage.
In fact, for a beginner real estate investor, it is easy to build a portfolio with value appreciation over a long period.
Most people dream of achieving financial freedom, be their boss and boosting their monthly income with
- Monthly Rental Income
- Property Capital Gain
However, becoming a savvy real estate investor is not as easy as flipping a switch.
You need to consider the risks and rewards of owning an investment property.
Real estate investors can learn to familiarize themselves with the United States’ real estate industry as a beginner.
If you are prepared to learn, research, network, and establish a robust framework—all these can contribute to a successful future.
You may think, if only you have the road map, a step-by-step plan to follow so you can use it immediately.
Well, you can find the answer in the rest of this article.
Step By Step Plans to Get Started as a Beginner Real Estate Investor
Below are the nine steps that show you how to get started with real estate investing.
For the best effect, I recommend you go through them from start to finish.
But if you are reviewing, click on each link below to jump directly to the specific step:
- What is Your Financial Planning Stage – Setting Goals
- Am I Ready To Invest In Real Estate?
- How to get started as a Beginner Real Estate Investor?
- How much time are you able to spend on your real estate investing career?
- Defining Your Exit Strategy
- Choose a Real Estate Investing Strategy or Niche
- Pick a Target Market
- Getting Help for A Beginner Real Estate Investor
- Decide Your Investment Property Criteria
- Build Your Real Estate Investment Team
- How to Finance Your Projects
- Raise Cash For Down Payments & Reserves
- Create a Plan to Find Deals
- Schedule Your Time & Prioritize Next Actions
#1 What is Your Financial Planning Stage – Setting Goals
What is your financial goal? Let me share with you a better way to plan.
No matter where you are right now—the important thing is you want to improve your finances.
Most new investors eventually want to reach financial independence, which is excellent.
The important thing is to find out your numbers.
If financial independence means the pinnacle of the mountain where your income is from investments – you need to know the numbers of financial plans and can include
- your career plans
- personal plans
- children’s education
- retirement options
- living expenses
- health care
Maybe your goals aren’t so big and frightening.
Perhaps you want something short term.
A short-term goal is something you want to do shortly, which can mean this week, this month, or even this year.
Is there something you hope to achieve in 24 months or fewer?
- Holiday aboard
So, let’s consider your overall financial picture before we get into the details of real estate.
The fundamentals of achieving financial independence are the same.
You can invest in real estate or anything else.
Real estate investing is a vehicle to improve your finances.
If you do not have any goals in place, then perhaps consider where you want to be in, say, five years from now.
If keeping your money in Fixed Deposit is not what you plan for yourself, look at the returns and how much risk you will tolerate.
To reach your financial independence faster, increase your savings rate.
When you have extra money, you can invest the savings into your chosen assets, like real estate.
For now, you need to identify where you are on your financial independence journey.
Are you at the starting line?
Maybe you are half-way running up the mountain?
Or are you near the peak?
For real estate investing beginners, goal setting is as crucial as educating yourself.
You learn more about real estate to equip yourself better to make better investment decisions.
Before you kick start your real estate journey, remember to look at your financial goals.
#2 Am I Ready To Invest In Real Estate?
As a beginner, your limited resources may dishearten you.
You could start and save for that 20% down payment for your condo in Singapore.
Price of condo: $880,680
20% down payment: $176,136
Even if you already have the $176,000 in hand, you will still need to pay a 30-year mortgage.
For Capital Gain, you will need to keep your condo for several years before you can sell it.
Many aspiring investors make the mistake of investing solely in their local home market.
What you can’t achieve in your home base doesn’t mean that it is impossible overseas.
You can make your dreams a reality even if you are a beginner real estate investor.
Did you know that a landed freehold 3 bed, 2 baths, single-family home (single-story bungalow in Singaporean context) cost only $150,000 in Houston, Texas?
If you are ready to invest in real estate, it may be time to consider leaping to the United States.
#3 How to get started as a Beginner Real Estate Investor?
In reality, the most important thing you would need to take stock of is your current financial standing.
It takes money to make money.
For you to take up real estate investing as a viable career and make it an income-generating business, investors should ask themselves these questions before getting started:
What is my business investing goals?
Do I want to go into business in the United States?
Do I want to co-invest with other investors?
Do I have access to a real estate training program?
How much time do I have to devote to my business?
These questions are here to help you avoid problems before you invest.
Start by looking at your finances:—do you have the ready cash to invest?
Remember, this is your own business, and with every type of business investment, there are risks and rewards.
The real estate business is no exception.
It is crucial to identify the level of risk you are comfortable taking and the degree of uncertainty you can handle.
As you answer these questions, you need to think of the financial goals you have for your future, your risk tolerance, and your current finances.
Once you identify your motivation to get ahead, you will set a clear path and move forward.
#4 How much time are you able to spend on your real estate investing career?
Time is a critical component for a beginner real estate investor.
In the beginning, accumulating knowledge is by far the most time-consuming aspect of real estate investing.
Your time often refers to time spent familiarizing yourself with the real estate industry and “owning” your properties.
While there are countless stories of how real estate investing has helped people achieve their goals—there are those who worry that the property business is too time-consuming.
Many fear being a landlord to a tenant from hell. Or your tenants call you in the middle of the night to unclog a toilet.
Your time is worth much more than the money you pay your property managers, contractors, and cleaners to handle.
Perhaps working with a suitable partner could help you realize the schedule you had always dreamed the future has for you.
Having a partner can help you free up your time and ease the transition as you get started.
Most of the finding right property comes from research. These include finding the right real estate mentor to learning real estate investment researching.
It is vital to find a system that helps you incorporate this into your business to actualize success.
Boost your self-education with webinars, podcasts, videos, books, and blogs from experts.
Learning more about real estate will help a beginner real estate investor make connections and investment decisions.
[Thinking about investing in real estate? Learn how to get started by registering to attend a FREE 2-hour real estate webinar to get you started.]
#5 Defining Your Exit Strategy
An exit strategy refers to the way investors plan to “exit” a real estate deal.
For example, house flipping is one of the most common real estate investment exit strategies that most people have seen on T.V.
Before putting out offers, real estate investors need to understand the most common and exit strategies out there.
There are four types of exit strategies for real estate investors.
A: Sell the Property
A quick sale as an exit strategy is the most common approach investors make for a relatively short profit.
B: Seller Financing
Seller financing is an exit strategy when the Seller (property owner) acts as the bank to the individual (s) looking to purchase the property.
This strategy works for a Buyer whose bank said he does not qualify for a mortgage.
When the Seller agrees and takes the down payment – he finances the Buyer on agreed terms.
The Buyer makes regular payments to the property owner for a certain period until he completes the last instalment.
It is only after the last amount that the Buyer receives the full legal title of the property.
A rent-to-own agreement is a deal that the Buyer commits to renting a property for a specific time, with the option of buying before the lease runs out.
Lease-option contracts give the Buyer the right to buy the home when the lease expires.
However, Lease-purchase contracts require you to buy it.
D: Flip and Sell
Flipping a property is buying at one price, then quickly selling at a higher price.
Flipping real estate contracts is an investment strategy with great R.O.I.
Real estate investors buy quick sell real estate from people who need to sell the property quickly due to divorce, relocation, or migration due to job.
Sometimes it could be from
- a foreclosure from a bank
- distressed property owners
- a real estate auctions
In actual life, some of these properties purchased below market value require significant repairs before you can sell them quickly at the market value.
As an investor, the hard truth is rarely the same as the fantastic flips seen on HGTV.
Sometimes repairs take longer than expected, which can be costly as it takes longer to flip the house.
Depending on the market, an expensive home can be harder to sell.
So, make fewer repairs as a Buyer will want to go with the prices in the neighbourhood.
#6 Choose a Real Estate Investing Strategy or Niche
All strategy starts with one thing – the goal is just to get started.
Let’s begin with just O.N.E. real estate strategy that will help you move from your current financial stage right to the next stage.
For a beginner real estate investor, starting with just one real estate strategy will help you focus.
You can have a change of direction later as you gain more confidence.
Confidence comes from making profits.
Using one specific strategy doesn’t mean you won’t have detours later.
The important thing is to get started. Real estate strategies that you can adopt or refine later will depend on your wealth stage.
Real Estate Strategy
There are several strategies for rental if you are interested in making a passive income. You can start with these.
All-Cash Plan—no debt, pay 100% cash for each property.
Rent and Leverage—You rent out your first property to “season” it and cash out on the equity to pay for another property.
The Debt Snowball Plan—borrow on your growing number of properties. You can speed up the debt by paying down one property at a time.
The Buy 3-Sell 2-Keep 1 Plan—buy three rentals, hold, then sell two and pay off debt on the third.
For now, choose one strategy that sounds most interesting and applicable to your situation. Then let’s move to the next step.
#7 Pick a Target Market
The price of the property varies in many locations, cities, and countries.
Would you pick closer to home—well, just because it is?
Some people have made this decision for two reasons.
- Fear of the unknown
- Reluctant to get out of comfort zone
I spoke to someone recently who owns industrial buildings in the city she calls home.
She is still buying industrial building when there is no new industry coming into the area.
The factories have moved out.
When did I ask her why?
She said,—I know this like the back of my hand.
I am comfortable, and I don’t have to worry about anything.
It’s like investing in my backyard.
Being local is good.
It gives you the advantage of intimate market knowledge and efficiency.
However, if you stay in a local market because of certain reluctance, you may miss out because of your fear.
People often ask if they should pick a new market when they invest—or chose home ground.
That is a good question.
The market you choose will make a big difference in your profits – your ultimate results.
You can manage real estate from a distance.
If the prices seem too high in your local neighbourhoods, consider what you can invest for the same amount in another location.
Whether you stay close to home or invest somewhere else, you should always spend time on research.
Do a market analysis first.
It would help if you had the decisions you make backed by data.
Some investors become confused with the difference between investing in a property and owning a home.
You get involved with the interiors and selection of materials, colour schemes, and furnishing for your own home.
#8 Getting Help for A Beginner Real Estate Investor
With a money generating investment portfolio, you will want someone to manage this to get the best results in the shortest time possible.
You can use this as your guide if your brand new to market analysis and research.
- Evaluate significant location criteria
- Economic growth
- Jobs growth
- Population growth
- Rent/price ratio
- Safety and Crime Rates
- School Districts
- Public Transportation
- Evaluate small scale location criteria
- Neighbourhood Covenants
- Home Owners Association (H.O.A.)
- Local Laws
- Decide Your Investment Property Criteria
Your investment property criteria list out an excellent investment.
I recommend you create a written investment profile that you can refer to so you stay focused on growing your wealth.
Your written investment profile can be simple and should include two major categories:
- Target property
- Target terms (your numbers)
Your target property will become more apparent when choosing a niche—a smaller segment of the entire market.
Noble Sky’s chosen niche (or niches) is simple.
We look to buy the ugliest house on the prettiest street.
- Your description can be anything like this example.
- Single-family houses (3 bedrooms, 2 baths)
- The full market price range is between $50,000 to $150,000.
- Ideal properties in a good school district, on quiet, safe streets.
- Convenient location with shopping nearby.
- Ideal properties can include a useable yard or land behind the property.
#9 Decide Your Investment Property Criteria
To determine the most critical investment numbers for yourself, you need to know your numbers.
- The 1% rule. – Your target purchase price should include upfront repairs.
- Net rental income for single-family houses—should be a minimum of $200/month.
- Cash-cash-on cash return should be at least 10%
- The discount from the full value of the property should be at least 10%.
Your criteria may change.
If you are a newbie, choose a few essentials investment property criteria for now.
If you find later that you need to adjust your criteria, you can always come back.
#10 Build Your Real Estate Investment Team
Real estate is not something you can do alone.
You won’t need employees.
However, you will need a ground crew.
These include advisers, independent contractors, realtors who can help you in their areas of expertise.
Choosing and building your real estate team is crucial.
Below is a list of some essential team members you’ll need from the remarkable book, The Millionaire Real Estate Investor.
- Inner Circle—your personal, closest team members
- Business partner
- Mentors/personal advisers
- Support Circle—your fiduciary or significant relationships help you with outstanding, ongoing tasks.
- Property manager (if applicable)
- An attorney specializing in real estate and business
- Certified Public Accountant (C.P.A.)
- Lender (s)
- Mortgage lender—for long-term financing
- Hard money lender—for short-term financing
- Private money lender—for flexible, short or long-term financing
- Service Circle—functional relationships between tasks you’ll need for your investments
- Closing agent/title company
- Home inspector
- HVAC technician
- Yard service
- Pest & Moisture control
- General contractor (for bigger remodels and pulling permits)
If managing people and your property turn you off, then perhaps a fresh approach would work better.
If you are asking—the best chance of finding your key team members is by networking with other like-minded real estate investors.
At Noble Sky, we have a community of ready investors who can co-joint and partner up with your business entity if you want to invest in more significant projects.
We have the SkyInvest Concierge, where we do 99% of the work for you.
You only need to do the !%, which is to sign the documents.
#11 How to Finance Your Projects
Consider your current financial standing.
Look at different exit strategies and determine which options will allow you to achieve your financial goals.
Unlike other investing forms, like stocks, bonds, and shares, we consider it healthy to use financing with a real estate purchase.
If you are a non-US investor or a beginner real estate investor, getting a bank loan from a U.S. bank will be very difficult and expensive at the on start.
Noble Sky will help you gain the property without using a bank loan.
We advise using all cash first to buy the property.
You can “season” the property by earning rental for six (6) months minimum.
After this, you can cash out the property’s equity to buy a 2nd property later down the road.
You will want to rely heavily on your mentors and your lending team members to help you line up the best loan fit for you.
#12 Raise Cash For Your Down Payment
Real estate investing is a business that allows you to use other people’s money (O.P.M.) to help you move forward.
How much cash will you need? The amount of money required will depend on your strategy. Are you buying a new property, or is one on the secondary market?
Saving your money is apparent.
Savings requires discipline to put aside money in a bank account you can’t touch until you hit your target.
You can do extra work for additional income or even cut other expenses out of your life.
The important thing is to be patient until you have saved the money.
There are no shortcuts to this method, but it works.
Do you own three cars and two motorcycles?
Why not delay gratification for expensive toys until later in life when you’re financially well off?
A way to do this could downsize to a smaller house or not selling your other cars and motorcycles.
Do you have a collection of junk you have collected in your storeroom or garage that will raise extra funds?
Selling is one of the safest and most logical ways to raise funds.
Using your credit card, taking personal loans can be dangerous if
Things go badly.
Easy borrowing money from parents, friends, and relatives can turn sour.
It would help if you were careful as the discipline is how you manage your cash flow.
I would advise against this.
Have you worked out how much your investment needs to produce to pay the interest of the $10,000 you borrow to invest?
Learn to handle that extra loan payment in a worst-case scenario.
If you can’t, the best advice is, don’t.
Partnering is like sharing a delicious pie, pizza, or cake.
How do we win with real estate investing?
It goes back to getting the cake that we want for 70% off.
Wouldn’t it be good if we can share the money and split the cake with them?
One way of partnering is co-investors, where two or three partners win.
The way to go about this is to only work with people you like and trust.
Everything that you have agreed upon to communicate in writing (contracts and agreement).
#13 Create A Plan To Find Deals
Good deals don’t drop out from the skies. Neither do they fall in your lap.
Finding a good deal is like prospecting for gold or going on a treasure hunt.
Before you find that hidden gem, you will need to turn over a lot of stones.
During standard economic times, stay disciplined with your investment criteria. The last thing you want to do is to succumb to the fever of a hot market.
#14 Schedule Your Time To Prioritize Next Actionable Plans
For a beginner real estate investor, I was once like you.
I used to devour and read everything I could find from books, attend seminars, workshops, and eventually flew to the U.S.A. to learn to invest in real estate independently.
I have bought into properties with research, without research, and even on occasions bought in blind.
We fight the results of my doing this in the early years with all the things that a newbie could do wrong—I did it all.
I thought since I had all the knowledge, I was bulletproof invisible—that was the same year that I accumulated colossal debt living off my credit card and from flying in 16 times a year to the U.S.A.
I lived in hotels, ate out every meal, rented cars to get around.
When I founded Noble Sky, I wanted to save other investors from Asia the “hell” of going in as a rookie.
Being a beginner real estate investor is not much fun.
All the steps I shared above, I’ve done it all—from living off my credit card to borrowing from the bank, family, relatives, and friends.
I wanted to fuel my dreams of being an entrepreneur and growing my wealth through real estate in the U.S.A.
If you want to cut through this process, you can sign up for a webinar and find out how you can enjoy this process without breaking out a sweat.
We have a coordinated, practical, actionable strategy to explain how you can invest in the U.S.A. safely and securely.
I’ll talk about prioritizing the next actions and make recommendations on how you can set up your real estate investment in the U.S.A. as a beginner real estate investor.
As I shared in the beginning, my goal was to save you the frustration and time for someone getting started on real estate investing.
Many of you will know too much or too little information can sometimes work against you as a beginner.
The above article is to let you get a grip on the framework to get started quickly.
I will put this in a nutshell.
You don’t have to dig a well to find freshwater.
All you need to do is go to the kitchen and turn on the tap to get drinking water.
We do all the work behind the scene to get the water pipes laid, put in the water filter, pay for the plumber to approve for connections, and even check that water pressure and pH of the water is safe for drinking.
We want to encourage you to get started and keep moving.
Most of all, we want to help you avoid and move past those other pesky beginner challenges like analysis paralysis.
Steps are only the beginning. By reading this article, you have started your learning journey.
Let me know I can help by making comments below.
Do you have questions or challenges?
What are your next real estate investing projects?
What are your next actions?
I’d love to hear from you in the comments below.
You can contact us for a free 1-hour Consult on how you can fast forward your journey as a beginner to be a savvy real estate investor.
Several resources outline real estate investing for beginners, all of which may be of use to those interested in getting started.
How long have you been investing in real estate?
Let me know which tip you found most helpful at the beginning of your career.