9 Steps For Beginner Real Estate Investors To Go Pro
In this introductory guide to investing in the U.S.A., we walk you through the basics of real estate investing, whether you are a beginner real estate investor or someone with experience in Asian markets.
I vividly remember being a beginner real estate investor.
As a beginner with zero experience in the real estate business, I knew I needed to get from Singapore to the U.S.A. to make it.
I was making a 7 figure income as a salesman with an education company in Singapore.
Basically, for all the money I was making, the lifestyle, my condo, and car—I was still basically an employee.
I knew that I wanted to be in business in the actual world.
It was just as overwhelming to get started.
I did the only thing I knew back then.
(I think most of my clients are now at the gathering information stage)
I learned as much as I could from books (begged, borrowed, and ordered online), seminars, mentors, and the school of hard knocks.
At first, I thought more and more education was the key.
I thought if I had more knowledge—that would be my superpower!
The Choices For Beginner Real Estate Investors
Let me share with you the cold, hard truth. More education isn’t always the answer.
As I learned more, I suddenly realized the many choices and challenges that lay ahead.
As much as I was excited and pushed myself to be pumped, ironically, knowing too much lead to analysis paralysis.
My best advice for a beginner, a real estate investor, is to learn a step-by-step plan from an experienced real estate investor.
This plan would allow a newbie to learn in stages while still moving forward.
By following the steps, I would have saved a lot of time – frustrations and becoming overwhelmed.
If you want to learn, it would be good to focus on the essentials while paying less attention to the inessentials.
You can make your dreams a reality even if you are a beginner real estate investor.
I can’t turn back the clock for myself.
For my family, I teach my children that they can make an income in the U.S.A. and live very comfortably in Singapore.
My daughter Layla has alerted me that she wants to study Drama in New York.
As a father, the thing that brings me the most joy is providing for my children.
Being able to plan and do well is something I take pride in.
I am sure many newbies feel this way when they look at their growing children.
You may think, if only you have the road map, a step-by-step plan to follow so you can start to use it immediately.
Well, you can find the answer in the rest of this article.
In the last 10 years, the New York City real estate market has been on a roller coaster.
Plan To Get Started For Beginner Real Estate Investors?
Let me share with you my Nine-Step Plan to Get Started (or Restarted) for 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:
1. What is Your Financial Planning Stage
2. Choose a Real Estate Investing Strategy or Niche
3. Pick a Target Market
4. Decide Your Investment Property Criteria
5. Build Your Real Estate Investment Team
6. How to Finance Your Projects
7. Raise Cash For Down Payments & Reserves
8. Create a Plan to Find Deals
9. Schedule Your Time & Prioritize Next Actions
You can also schedule a 1-ON-1 personal session with me on how we can strategize on building your portfolio.
Step 1—What is Your Financial Planning Stage
What is your financial goal?
I find that this is 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 everything is covered by income from investments.
You need to know the numbers of your for
- living expenses
- children’s education
- retirement fund
- health care
Maybe your goals aren’t so big and frightening. Maybe 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 less?
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 choose to invest in real estate or anything else.
Real estate investing is a vehicle to improve your finances.
To reach your financial independence faster, you simply have to 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 (like I was as a beginner)?
Half-way running up the mountain? Or near the peak?
Properties priced below market value will often receive multiple offers. Getting a heavily discounted property is a boon in real estate investment.
Step 2—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 ONE real estate strategy that will help you to 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 choose to adopt or refine later will depend on your wealth stage.
Real estate strategy—Rent houses
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 a debt on the third.
For now, just choose one strategy that sounds most interesting and applicable to your situation. Then let’s move to the next step.
Step 3—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 lives in. She is still buying industrial buildings 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 decide to stay in a local market because of a certain reluctance, you may miss out because of your fear.
People often ask if they should consider choosing 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 final results.
You can manage real estate from a distance.
If the prices seem too high in your local neighbourhoods, you may want to consider what you can invest for the same amount in another location.
Whether you choose to 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 to be backed with data.
Some investors become confused with investing in a property and owning a home to live in.
You will want to be involved with the interiors and selection of materials, colour schemes, and furnishing for your own home.
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 you are 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
• Neighborhood Covenants
• Home Owners Association (H.O.A.)
• Local Laws
You’ve picked a good time to learn about selling and buying real estate – remember to take notes!
Step 4—Decide Your Investment Property Criteria
Your investment property criteria list out a good 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 clearer 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 with three bedrooms and two 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 usable yard or land behind the property.
Your investment numbers.
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 over time.
Noble Sky’s criteria for investment numbers differ significantly from this.
If you are a newbie, choose a few essential investment property criteria for now.
If you find later that you need to adjust your criteria, you can always come back.
Step 5—Build Your Real Estate Investment Team
Real estate is not something you can do alone.
You won’t necessarily 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.)
- 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 the idea of managing people and your property turns you off, then perhaps a different type of 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.
Step 6—How to Finance Your Projects
If you are a non-US investor or a beginner real estate investor, getting a bank loan from a U.S. bank will be expensive at the start.
Noble Sky will help you acquire the property without using a bank loan.
We advise you to use all cash first to buy your first 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.
Unlike other investing forms, like stocks, bonds, and shares, we consider it healthy to use financing to help you with a real estate purchase.
If you are a non-US investor, many of these will not apply.
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.
Step 7—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 cash needed will depend on your strategy. Are you buying a new property or one that is 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).
You can find out more by talking to us. It will be a FREE 1-on-1 session to plan on how to put your dreams within reach.
Step 8–Find a Good Deal
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, you have to stay disciplined with your investment criteria.
The last thing you want to do is to succumb to the fever of a hot market.
You can have a strategy of either flipping or buying and holding real estate for rental income.
Step 9—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.
The results of my doing this in the early years are fought with all the things that a newbie could do wrong—I did it all.
I thought at one point, since I had all the knowledge, I felt bulletproof and invincible—that was the same year that I accumulated a huge debt from flying 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 International, 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 know why you want to invest and 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 US 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 US as a beginner real estate investor.
Time to align your real estate business for the road ahead.
As I shared in the beginning, my goal was to save you the frustration and time for someone to get 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.
We get the approval for connections and even check that the water pressure and pH of the water are 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 how I can help by making comments below.
Do you have any questions or challenges on property investment?
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.