real estate investing for beginners

Real Estate Investing for Beginners: 14 Tips for Success

by Brandon · 38 comments

Are you just starting out?

Sometimes real estate investing for beginners can seem a bit intimidating and it’s easy to get lost in the lights and sounds of all the blogs, books, and television gurus with their slick hair. To help cut through the crap that’s out there I wanted to create a short list of tips you can use as you embark on your journey to find financial freedom through real estate.

No, this isn’t going to teach you everything you need to know. However, I hope this list will help point you in the right direction. It’s not exhaustive by any means, just a brief list of lessons I’ve learned along the way and hope will help propel you toward success. If you are reading this and have a little bit of experience in real estate investing – I’d love for you to share some of your favorite tips in the comments below; but first – here are fourteen tips for beginner real estate investors.

1.) Be Resolved.

Real estate is not something to do on a whim. Investing in real estate is a life long pursuit to take control of your financial future – not a get-rich quick scheme. As an investor – you will struggle. You will make mistakes. You will fail. The successful investors are the ones who can take those experiences and turn them into lessons to improve their skills.

2.)You Don’t Need to Be an Expert in Real Estate Investing.

Too many individuals talk about investing in real estate but instead just get bogged down with the vast amount of information out there. I once wrote an article for BiggerPockets titled “The Top 100 Ways to Make Money in Real Estate” that chronicled multiple niches, careers, and methods that investors use today to build wealth. Want to know a secret? I only am good at a small handful. People often email me and ask me advice on areas of real estate I know very little about. I try to help as much as possible or at least point them in the right direction, but the simple fact is no one knows it all. You don’t need to be total expert in all things real estate.

3.) You DO Need to Do Your Homework.

On the opposite end of the spectrum are investors who heard about real estate being a great investment and jump in with both feet – unsure of where they are going to land. Sometimes these investors get lucky and make it big (and usually go on to be the next big guru) but the majority of the time these investors fall and fall hard. Don’t be like them. Do your homework. Study the niche you want to invest in and learn everything you can about that subject.

4.) Learn to Love Reading.

You are obviously reading this article, so you apparently know how to read. Do more of this. Check out my list of the Seven Must Read Books for Real Estate Investors and also my follow-up post, “Seven MORE Must Read Books for Real Estate Investors.” If you don’t like reading – at least learn to listen to audio versions. Books have so much information in them and it’s a shame so many individuals are losing their love of books.

5.) As a Beginner, Connect with Local Investors. 

This doesn’t mean to spam them with requests – but simply reach out. Begin hanging out where they hang out. Ask them to show you some of their properties. Most investors love to show off their accomplishments, so allow them to and pick up on every tidbit of information they can give you.  Local investors will have a much better grasp at what works in your community than I or any other online investor will know.

6.) Learn the Lingo. 

If you don’t know the lingo – you are going to look like a fool. Plain and simple. Don’t start talking to an investor about how you think his cap rates are the wrong color. You’ll just look stupid and display your ignorance. Be honest if you don’t know something and don’t try to be something you are not.

7.) Get Creative.

One of my favorite lines in one of my favorite books, Rich Dad Poor Dad, says “The poor say ‘I can’t afford it.’ The rich say ‘How can I afford it?”  I love this. Lasting wealth is built through creativity. (click here to Tweet this quote!) Practice changing your thought patterns from “I can’t” to “how can I” in every day life. This simple practice will change the way you view conflict in all areas, including your real estate business. My wife likes to throw this on me when I tell her we can’t afford something she wants. She’s a smart gal.

8.) Learn to Sacrifice. 

How bad do you want financial freedom? If you want to use real estate to start living the life you’ve always dreamed you are going to have to sacrifice. You may need to forgo a vacation and use the money toward a down payment instead. You may need to move several times in order to build up enough capital to begin investing. You may need to learn how to use a paint brush and do your own work.  Investing in real estate is the most rewarding thing I’ve ever done – but it’s not always been easy. There were years of sacrificing  (time, money, and opportunities) to get financially free. If you are looking for a get-rich quick scheme – look elsewhere.

9.) Learn (and Trust) Basic Math.

The math involved in a real estate investment is not college calculus. We’re talking fifth grade math and it isn’t difficult to learn. Income minus expenses equals cashflow. A gallon of paint costs $20 but a painter is going to cost $200. That’s the kind of math you need to get good at. Don’t assume anything – but use your math to make sure a deal is solid. Use a basic spreadsheet to analyze a deal or (shameless plug) spend $19 and download the very investment property calculator I use to analyze every single deal I do.  Once you understand the math – don’t deviate from it. Trust it. Don’t let your emotions get involved. Real estate is a number’s game and the quickest way to fail is to forget that.

10.) Make a Written Plan. 

You wouldn’t take a road trip across the country without a map, so why take your trip through financial freedom without a map? When I first began investing, I actually sat down and created a plan to get from where I was to where I wanted to be. While I didn’t follow the plan exactly (life never follows the ideal) I stuck by the principles which later were expressed in my first eBook “7 Years to 7 Figure Wealth” which you can get by signing up for my weekly newsletter at the top of this page (or below, or on the right. It’s all over. Seriously – if you haven’t read it … why not? It’s free!)

11.) It’s Okay to Start Small.

You don’t need to buy a 24 unit apartment complex right out the gate. Perhaps your first investment will be your first home. Perhaps you’ll start with just a 50/50 partnership on a small flip. This is okay. It’s easy to get over impressed by the big deals that the internet gurus talk about but even they had to start somewhere.

12.) Treat Your Business as a Business.

Real estate is a business, so treat it that way. Keep it organized, build systems to manage your life, and seek to improve your efficiency. The reason so many landlords get burned out and hate the role is because they treat it as either a hobby or a job. It’s neither. You are a business owner and as such it is your job to manage the business to the standard which suits you best.

13.) Start with Good Bookkeeping Now.

This was a huge mistake for me. When I first began, the paperwork was just a small blip on my radar and as a result my bookwork – to this day – is a giant mess. I’m slowly untangling the mess and creating a system that works but had I started with a system I would ave significantly less stress (especially around tax time.)  Meet with an accountant as well as a lawyer after your first purchase and begin plotting your bookkeeping, taxes, and legal holding status. Your future self will thank me.

14.) Don’t Quit Your Day Job. 

Investing has two faces: the career side and the investment side.  It doesn’t need to be both. I use real estate as both currently, but I honestly believe that if there were a career I liked better I would do that in just focus on the investing side. Let me explain – flipping houses is part of the “career side,” as is “wholesaling” and managing. However, by buying cashflowing properties, reinvesting that cashflow into bigger and better real estate, and setting up systems to manage that business, you are creating investments for your future.  There is a principle I believe strongly in called “The Minimum Wage Millionaire” which states that anyone, regardless of their salary, can become financially free if they invest smart and plan. If your ideal job is the “career side” of real estate-  then make that your job and your investment. However, if you ideal job is teaching gym at a local high school – do that and invest on the side. Find whatever job makes you the happiest and do that but use real estate as your investment vehicle to gain financial freedom.

Today’s Episode was Brought To You By the Letter “C”

The letter “c” was broke on my keyboard and I still managed to type up these 1600+ words. Every time I pressed “c” I had to press it like five times. I probably have quite a few words like “I like ookies better than andy” throughout this post.

I bet you, with a wonderfully working keyboard, can do a lot better :)   If you’d be so kind, please leave me a comment below: what is one tip that you got the most out of OR what is one tip you want to share with others?

Photo Credit: Alessandro S. Alba

About Brandon

has written 101 Awesome posts in this blog.

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director and owner of RealEstateInYourTwenties.com. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

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{ 38 comments… read them below or add one }

Brett November 15, 2012 at 3:37 pm

The one thing I learned is while you don’t want to jump in too early, you do have to jump in sometime. It’s hard to know when that time is but there will always be one more book to read or one more blog to check out but in the end, you got to take a leap of faith at some point.

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Brandon November 15, 2012 at 4:30 pm

Great advice Brett. That “Paralysis Analysis” kills many dreams before they ever have time to take hold.

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Arthur Garcia November 15, 2012 at 5:52 pm

Brandon,

This is a great list. #14 real hits home for me. Although I love the RE business, I may have to stick with my day job for a few more years until I get a little further along in my financial goals.

Keep up the great posts!

AG

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Brandon November 15, 2012 at 9:32 pm

Thanks Arthur! As I see it, real estate has more power when you have a day job than when you are trying to live off the income. I bet you couldn’t do the awesome stuff you are doing without that job. Oh, Your home is coming along nicely! :)

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david November 15, 2012 at 7:47 pm

Agreed. My pastor likes to say, “if you wait for the conditions to be right, you will never do anything”. My wife and I have been looking at properties for a few months, and we are looking to make a purchase by the end of the year. Great article.

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Brandon November 15, 2012 at 9:30 pm

Hey David, that’s an excellent quote. Good luck on your endeavors and let me know if I can help in any way!

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Elizabeth November 15, 2012 at 9:30 pm

Start young? ;)

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Brandon November 15, 2012 at 9:36 pm

Haha! Perfect Elizabeth! The earlier you start, the more power our friend “exponential growth” has :) Thanks!

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Elizabeth November 17, 2012 at 5:01 am

Nothing like compound interest over time! :)

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Danny Johnson November 17, 2012 at 12:26 am

Great list!

I’d just like to add that you should not WHY you want to do it. Without a clear goal of what you want to accomplish, all of the hurdles that you will face will stop you dead in your tracks. Make sure you know why you want to get in this business and let it pull you threw the challenges.

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Brandon November 17, 2012 at 4:47 am

Very true, Danny. I think that’s why a lot of real estate investors get burned out – because they never knew why they were doing what they were doing!

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Bobby November 17, 2012 at 7:22 am

Great advice, Brandon. One thing i would like to stress, to new investors, is the importance of setting up the correct entity LLc, S corp, etc. Most people can do it themselves to get by at first, and usually don’t have to worry much, but as you grow the target gets bigger, and in the rental business you need to be protected as best you can. Soon as you can afford to let the professionals do it, DO IT.. I would (as always) ask seasoned investors what attorney and cpa they use. I’m like you Brandon, ten years in, and still shuffling from time to time..

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Brandon November 19, 2012 at 3:48 pm

So very true, Bobby! It’s relatively inexpensive to do, but potentially catastrophic if it isn’t done correctly. This definitely isn’t an area to skimp on!

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Affordable residential properties Gurgaon November 19, 2012 at 7:30 am

Great tips. very thankful to share with us.

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Alex November 19, 2012 at 12:52 pm

Great post Brandon! I identified myself with a couple of them.
#7, I liked the idea about changing your thought pattern from I can’t to How I can. This is what I call the battle with your own mind, is always there and you have to be very strong to keep it. Thanks for the reminder!
#9, I really liked the simple way you expressed, failing with the numbers is also the quickest way to fail in RE, (btw, I’m using your spreadsheet calculator and it’s a great tool).
#14 puts everything is perspective about the reality that you have to do something for living that pay your bills. I really liked the other perspective that you currently follows in terms of flipping and wholesaling on the career side and buying long term on the investment side. I hope to be there someday!

Thanks for sharing your valuable Real Estate experiences with us!
Alex

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Brandon November 19, 2012 at 3:53 pm

Hey Alex, Thanks for the comment. And thanks for using my spreadsheet calculator. Speaking of that – I need to come up with a better name for that thing! Any suggestions?!

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Buy Properties In Colombo November 20, 2012 at 8:25 am

A lot of good information you have provided. Your post will help many people to invest their money in real estate market.

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adam November 26, 2012 at 6:39 am

hey brandon, what age did you start investing in real estate?

I’m 21 and plan on investing in real estate within the year( going to start small with mobile homes).

any advice? i have saved up decent capital to start up.

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Brandon November 26, 2012 at 6:50 am

Hey Adam,

I started at 21 with the purchase of my first home (Primary residence which sorta turned into a flip that I sold after 9 months.) Mobile homes, from what I’ve heard, are a great way to get started – if you are smart about them. Check out John Fedro’s site at MobileHomeInvesting.net. It’s the best site I’ve seen on mobile home investing. Also, check out this article as well: Your First Investment Property Should Be…

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Joseph Cannon November 28, 2012 at 7:08 am

Hey Brandon, great article. What is the best way to connect with local realtors?? How do I find out where they hang out? How do you approach these individuals?

Thanks, Joe

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Brandon November 28, 2012 at 4:52 pm

Hey Joe – Realtors are in the business of connecting – so it’s actually quite easy. You could simply call up an agency and ask what agent did the most sales last month and then ask that guy to get some coffee. You could attend some open houses just by driving and looking for signs on a Sunday afternoon. I’d approach it as, “hey, I’m interested in real estate investing and would like to get your advice on what kind of properties there are around.” They will be your best friend. From there – they can share advice, connections, etc. And it’s free. Just make sure when you eventually buy a house on the MLS you use them so you aren’t just wasting their time!

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Joe White Philadelphia Agent August 20, 2013 at 9:05 pm

The tips above are great…..a lot of investors come to my open houses, just because they heard of me and they want an informal way to meet/interview me.

Find an agent that has some basic idea of construction costs, to help you compare what improvements will increase the value, beyond their own cost.

Also, ask how they help sell property: Will he take the photos himself or hire a professional, will he be distributing postcards/mailings to market the property, will he be on the phone calling neighbors.

Obviously not all marketing tech. are appropriate for all properties, but you should start getting an idea.

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Seth November 29, 2012 at 4:13 pm

Hey Brandon, thanks for the mention of BiggerPockets in this post. I just checked out that website yesterday and it seems like a great resource – I just wish I would’ve heard about it sooner!

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Joe White December 1, 2012 at 12:48 pm

Helpful!
The list itself (a list), I think is the main thing. I’m a realtor that works with several investors, each at a different level, here in Philadelphia.

The more profitable investors I work with, are noften not the ones that I would describe as being the smartest – they are often the ones that stick to a plan.

In real estate, I think it is easy to deter from your own critria. We all see, (and agree) with a list like above, but often we get caught up.

For example, I see my clients that put in the right offer on a property, but when that offer gets rejected they have trouble moving their focus to the next property.

They go against their own critria and they pay, way above what they know is the right price for them.

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Joe December 13, 2012 at 3:48 pm

Brandon,

I thoroughly enjoyed your list. I am just getting started after 20 years of reading and thinking about it. I want to learn and then teach my four sons these concepts so they can have a life of financial independence.

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John February 22, 2013 at 6:15 pm

Great blog Brandon! Your site is really giving me the confidence to finally step into Real Estate. I am 21 at USF and am buying my first home this summer. Thanks for the info!

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Rafael Majorca Villas May 16, 2013 at 4:06 pm

Are you sure to recommend buying a house with the economic situation? My clients are very afraid to buy property because every three months, the prices of the properties.

They are afraid to buy a property for 15 when in half a year is for 10. How do I help them choose? How I can motivate them to buy a house?

Thank you.

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Phil May 17, 2013 at 3:24 am

Great Blog Brandon! your getting better than i expected and your post have a Superior Content.

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John June 6, 2013 at 4:39 pm

The thing that hit home with me the most is #8(learn to sacrifice). Being 21, it’s very hard not to go on vacations, go out with friends every weekend, etc. But I know that if I want financial freedom I have to be willing to sacrifice. Great article, thanks for sharing your knowledge.

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Peter Reid Bazzo Real State July 4, 2013 at 4:31 am

Great job Brandon! i like your blog.. i hope you can write more article about real estate..

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Sandy August 17, 2013 at 4:40 pm

Looking forward to reading your ebook

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zainul September 22, 2013 at 7:04 am

hey brad ,thanx for the great advises to the beginner like me…

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divadown07 December 28, 2013 at 12:35 am

I appreciate the advice to treat the business like a business. Paperwork is already a small headache, your advice confirms and affirms my commitment to getting this right for us as we move forward.

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Matthew December 28, 2013 at 2:44 am

Great tips! Thank you… I’m 22 looking to purchase my first property soon – deciding between either a condo or a house. The tip that stood out most was the financial math side of it all… I always tend to find the easy way out and hire the painter opposed to painting myself… but when you write out the math you really see how much you’re saving doing one over the other! Great tip, thank you!

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Hil February 5, 2014 at 8:46 pm

Great Blog, I will get my 18 year old daughter to follow… Thank you!

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Windy February 18, 2014 at 10:40 am

Agree. I will help my 28 year old daughter to follow too

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Wesley Otts March 25, 2014 at 5:07 am

#7 The poor say”I can’t afford it” and the rich say “how can I afford it”! EVErYTHING I have read about financial freedom, has mentioned that quote and many others from “rich dad poor dad”. I also liked #14. I have been wanting to flip houses since before I got out of high school. I’ve helped people flip properties but have never done my own. I’m reading everything I can and get as much knowledge about it as I possibly can before I even take another step towards investing/flipping. Thank you for the post. Very informative.

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Brian Linnekens April 10, 2014 at 7:38 am

Starting a career in real estate investing is very exciting! Real estate investing is a simple business. Real estate investing can be a very profitable field to get into, if done properly. Make sure you’ve done your homework and know exactly what you’re getting into before putting large amounts of money on the line.

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