Inman spoke with industry pros to learn their top tips for first-time real estate investors, and they had plenty of knowledge to share with newbies in need of a little bit of confidence.

Starting any new business endeavor can be intimidating, but embarking on the journey of becoming a real estate investor can be especially scary for those who have never done it before. First-time investors may feel like the stakes are pretty high, but fear shouldn’t prevent anyone from giving it a shot as long as they prepare themselves in advance.

Courtney Poulos

Inman recently spoke with a few industry pros to learn their top tips for first-time real estate investors, and they had plenty of knowledge to share with newbies who need a bit of confidence for getting into the game. Here’s what they had to say.

Courtney Poulos, owner/broker at ACME Real Estate

“If you can’t buy alone, consider buying with a friend! When I bought my first commercial investment property, it was a partnership opportunity where I took on the debt and my partner paid the downpayment. Now we are both benefitting from the market appreciation and are seeing our retail rental income increase as well. Everyone wins — just make sure your ownership agreement is prepared by an attorney and everyone is clear on an exit strategy.”

Farshad Yousefi

Farshad Yousefi, co-founder and CEO of Fintor

“Start with a small investment and use that experience to understand how real estate investing works before jumping into larger deals. As you learn, you should expand to larger deals and diversify with different property types. There are platforms, like Fintor, that enable you to invest with a low entry point and diversify across multiple properties with as little as $10.”

Harma Hartouni, broker/owner of Harma Real Estate at Keller Williams

Harma Hartouni

“Keep it for 10 years or don’t buy it for 10 minutes. I don’t believe in short-term investments. Nothing good comes fast, no matter what market you buy in. If you hold on to your real estate for over 10 years you will see the return. Don’t try to take a shortcut.”

Raf Howery

Raf Howery, CEO and founder of Kukun

“Every investor must devise their own process for due diligence and forecasts. We often make emotional decisions when we buy real estate. Investors have to set aside any emotional attachment to a property and make logical financial decisions. Make sure you have enough data points on every property and its appreciation outlook.  You can collect a lot of the data from the internet or get an iHomeReport from [real estate property data and predictive analytics company] Kukun. The report tells you its history, its appreciation outlook, the history of permitted work done, and how the home is situated among the most essential services from schools, to parks, to hospitals to grocery stores.”

Yawar Charlie

Yawar Charlie, director of estates division at Aaron Kirman Group at Compass

“My biggest tip for first-time real estate investors is to think outside of major metropolitan areas. Right now the housing market is extremely accelerated. First-time real estate investors should take a look at other areas that have emerging markets or industries. For example, Nashville, Tennessee, is super hot right now with Airbnb and short-term rentals. Property can still be had at a good value and have a strong rental turnaround. Investors should avoid areas that have already peaked.”

Kymber Menkiti

Kymber Menkiti, regional director for Maryland and District of Columbia Region at Keller Williams Realty

“Get your walking shoes ready! As a first-time investor, commit to being a student of the market you are investing in. One of the best ways to do this is by grabbing your shoes and getting familiar with the neighborhoods — block by block! This presents an opportunity to not just gain a better understanding of property values and conditions, it also can uncover your first investment opportunity! Talking to neighbors and local businesses can provide insight into who may be ready to sell.”

Gary Wilson

Gary Wilson, lead trainer at Real Estate With Gary Wilson

“There’s a formula for success that consists of three variables, and the first variable is getting the right education. The second one is the right information. On our team, we have several dozen websites we use to gather information on people and properties — all the details, all the numbers on everything we need so that we know we’re making a good decision. And the third variable is correct action. Not doing the no money down stuff, but actually using cash, using money to put a down payment down. So the formula is, the right education + the right information + the right action = right results. It’s academic.”

David Parnes

David Parnes, co-founder of Bond Street Partners at the Agency

Location is very important. It’s all about location because if you buy something for the long-term, you can change your house by remodeling it and reconfiguring it, but you can’t change where it’s located. So always, location is no. 1. If they’re going to do a rental, they’ll either want walkability, or if it’s a view property, a great view. So, location and then obviously as much land as possible because at the end of the day, more land gives you more options so your investment will be worth more in the future with more land. All the things you can’t change about a property [are] the location and the size of the land that you’re buying.”

Rick Guerrero

Rick Guerrero, director of branch sales and strategic partnerships at US Mortgage Corporation

“Make sure you have good cash flow because right now for example, I talk to a lot of friends who are buying an Airbnb… and they’ll say, Rick, can you get me pre-approved for $250,000 or $500,000, whatever … and my thoughts to that, because they’re my friends, is don’t buy. Because right now, in my opinion, everything is overpriced. If you’re going to buy a beach house in Florida right now, it’s $100,000 more than it was 18 months ago. Are those prices going to hold? Maybe, maybe not. And now what you have to consider is, now you’ve bought this property for $100,000 more than it was 18 months ago, you’re going to put it on Airbnb, and you’re going to compete against others that had their properties for $100,000 less. So where you have to rent it out now for $500 a night, you’re competing with people who are renting it out for $350 per night. So my advice would be run the numbers and make sure you’re cash-flowing solid returns. Another tip I could possibly say is don’t buy on-market properties, buy off-market.”

Gretchen Pearson

Gretchen Pearson, president and CEO of Berkshire Hathaway HomeServices Drysdale Properties

“Don’t delay getting started. Just buy one, don’t be picky about where. Get one, start saving for the next.”

Eric Eickhof, broker at Fulton Realty

Eric Eickhof

“My best advice is, if you’re beginning in real estate, get a property that is easy enough to self-manage, especially on your first few properties. One, because a property manager might be 10 percent of rent, but your total income may only be 20 percent of rent. So, a property manager may take about half the income. And the reason why I think it’s important to self-manage early on is you gain a lot of experience and knowledge of how the property works and how much things really cost and how difficult it is to find tenants and fill vacancies and that kind of thing. So, later on, once you hire property managers, you then kind of know if they’re pulling the wool over your eyes or not. So, it’s important to buy in an area that’s closer in proximity [to you] but also a type of building that doesn’t have a ton of maintenance, and something in an area that you would feel comfortable managing, where you know the area.”

Mike Hills

Mike Hills, vice president of investment brokerage at Atlas Real Estate

“Don’t buy what you like because no one cares what you like. Buy the deal, buy the property, buy the location, whatever attracted you to the property, remember, you’re not buying for what you like. It doesn’t matter if you want to live there — will other people live there? Who’s your target market? Try to reach that target market.”

Laura Alamery

Laura Alamery, real estate coach and investor

“To really be focused and wanting this really bad, I think is the first thing. When I have a conversation with somebody and they say they want to get into real estate investing, sometimes I have to dig because they might say, ‘Well, everybody is,’ or ‘Oh, I want more money to be able to take vacations,’ but that is really an underlying issue because I know that if they don’t bring it out of them, they’re never going to win. This is a hard business — this is not something to get rich quick. People try to sell the dream, right? To say, ‘Oh, you know, this is easy’ or ‘You can do this and that.’ No, it’s not easy at all. So, being focused, having the drive, having the determination, having the consistency.

Jason Sterner

Jason Sterner, founder and president of Southern Homestay

“In my journey in real estate, what [advice] probably helped me the most was ‘be a good listener and be patient.’ So I think a lot of people get into real estate because they want to get rich, but that’s actually the opposite. Wealth comes by being patient and being a good listener. So, when you do that, it translates into either solving people’s problems, whether that’s buying real estate from somebody else and you’re solving an issue for them because they need to sell a property, or in my case, teaming up with other investors and helping them solve a problem in managing a property that they want to keep and creating cash flow so that they can live a different lifestyle than they currently have without doing the work themselves.”

Mark Ferguson

Mark Ferguson, founder of educational investing website Invest Four More

“Make sure you know all the expenses that go into investing! The little costs often surprise people. Property taxes, insurance, utilities, maintenance, and vacancies can add up to a lot of money, and many people do not account for those costs.”

Email Lillian Dickerson

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