Five steps to take before making your first real estate investment

Are you fairly new to real estate investing? You may have already heard that real estate crowdfunding is a simple way to explore investing from your own comfortable space and a handy computer. You can browse through different types of investment and properties – homes, apartments, retail stores, and office buildings, among others.

Many investors want to become more familiar with the real estate investing’s dynamics – evaluating the potential returns, possible risks, and choosing projects – before making that first investment of $5,000 or more. It’s true: online investing can become more comfortable if you’ve also viewed real estate properties first-hand, had a confidante to ask questions to, or gotten your hands on the right questions to pose.

Here are suggestions from iFunding to help you get started. This week we look at how to gain practical and local experience before you invest. In the next blog post, we will name the top introductory books to fill you in on investing strategies, understanding an investment’s potential, and asking discerning questions.

How to get started:

  1. Join a local real estate investors association (REIA): Most cities or counties host REIAs, which are casual meetups of down-to-earth real estate builders and owners, investors, contractors, lawyers, bankers, etc. discussing the best investing strategies and sharing opportunities. There’s usually a speaking time and plenty of time for networking. Ask if someone you enjoy speaking with at a REIA would take you along to see an investment property. REIA events are often monthly in the evenings, and membership is either free or for a modest annual fee. To find one, try googling on “REIA” and your town name, or visiting meetup.com.
  2. Join BiggerPockets.com: Bigger Pockets is the largest, most active online community of real estate investors freely sharing advice and responding to each other’s questions. We do mean “freely sharing” because there is no cost for an entry membership that delivers great value. Over 100,000 fellow investors and scores of discussion topics active on any given day can’t be wrong!
  3. Attend a real estate foreclosure auction or tax lien sale in your town: Actually investing in foreclosed properties or trying to buy the rights to overdue city property taxes is a high stakes strategy for the experienced investor. However, attending one of these live events as a bystander can be an fun and exciting way to consider a range of properties and exercise your intuition (and your calculator) to estimate the appreciation value of a house. It’s best if you read about properties in your town that will be “on the blocks” at the next event, then drive by the property in advance.
  4. Supplement your local visits to properties with online knowledge: Google Maps’ Street View will give you a look at the house before you visit. Zillow provides square footage, buy/sell/rent prices, supply and demand and photos for many residential properties. NeighborhoodScout reports about the economic trends and demographic profiles in the area around a property.
  5. Browse several crowdfunding sites: Crowdfund platforms like iFunding give you exposure to a variety of deals at once, including due diligence background research and deal terms. To gain experience with the same number of properties, and the same depth of data, through in person contacts would probably take months if not longer. Remember that an account for an accredited investor is free, and you don’t have to invest until you’re ready.

We’d like to leave you with this thought from Deirdre Virvo, co-founder of the Southern Connecticut REIA. Deirdre was asked in an earlier iFunding interview what it takes to get started in real estate investing.

“My first advice on learning about real estate is to read, read, read. However, in the end, accept that real estate is a hands-on business. Thus, you need to take steps both to get involved and to keep learning. A lot of people are real estate junkies, taking copious notes at endless classes. Then, when I run into them years later, they still haven’t invested in their first property. I say: get out and meet others, and be comfortable putting in a modest amount into your first venture to get your feet wet.”