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Hey guys! Here at Real Money Robert, I’m all about using your resources to help build your income! Personally, I’ve used my side hustle to generate about $10,000 in extra income for myself this year, and next year is going to be huge! Even if I don’t grow my side hustle and maintain my current income levels, I’ll make an extra $30,000 next year!

Yep! $30,000 extra, even if I don’t grow!

So I love a good side hustle!

One of the side hustles that has always fascinated me is real estate investing. I’ve been close to taking the dive into this world a couple times, but haven’t pulled the trigger yet. As such, I thought I’d bring in my friend Alex from Financially Free Millennial to talk a little bit about the Do’s and Don’ts of real estate investing!

Take it away Alex!

Introduction

At Financially Free Millennial we actively invest in real estate because we believe it to be one of the most lucrative passive and active investments you can make in your life.

There is a reason why Mcdonald’s is not a burger company but a real estate company that sells burgers!

There are a ton of ways to invest in real estate but today we will talk about some do’s and dont’s when it comes to real estate investing.

Real Estate Investing Do’s – Figure out your Finances

Without money, investing in real estate will be almost near impossible. In Bigger Pocket’s book on Investing with Little or No Money Down, they admit you need capital to invest in real estate.

It would be impossible to invest anything other than your time without money but let’s focus on REI.

The first thing you want to do is figure out your financial health and see how your current situation would allow you to invest in real estate. Do you only have a couple hundred dollars? Investing in a REIT would give you the ability to dip your toes into real estate investments without a giant bowl of money.

I have known people to take cash advances out on their credits cards or use six-month personal loans to invest in real estate but this would not be a great idea even for a veteran.

Make sure you have the following when looking at your finances.

A steady job that supplies you with a consistent W-2.

A good credit score.

Reserves of your personal and business expenses in your bank account, usually 6 months worth.

You won’t need a personal or business big-ticket purchase soon, such as a car or a new personal residence.

These will all be considered when getting a conventional or hard money loan when investing in real estate. As a beginner, these will be your most likely options unless you have a huge nest egg of cash.

Real Estate Investing Dont’s – Be Like Icarus

If you do not understand something fully, admit your fault and start learning more! Icarus was the son of Daedulus in Greek mythology and his hubris was his demise. Icarus was flying too close to the sun since he thought he could fly as high as he wanted even though his father told him that the wax on his wings would melt. Sure enough, the young boy got too close to the sun’s rays and his wings fell off. He plummeted back down to earth and drown in the sea.

I think I am better than I am at new things right off the bat after I watch a couple of YouTube videos and search some forums but this is catastrophic in the world of REI. Right when you think you understand a concept, go back and start your research from scratch.

I spent two hours every day searching online about real estate investing and rental properties for over six months before I started to even look for my first property. I attended real estate investment meetings in my area and would talk to anyone I could about the topic. Hubris can get the best of anyone but do not let it be the reason that your real estate investing career is short lived.

Real Estate Investing Do’s – Learn Your Market

Once you determine if you can invest in real estate financing, you have to decide where you will invest. By market, we mean the area you will look for a property. Knowing a market is more important than the type of investing you are choosing because not every type of real estate investing is suitable for all markets.

For example, the town we live in is excellent for flips or rentals but go ten minutes south or ten minutes west and those markets are only good for rentals. Knowing your market will be the difference between buying a dud or buying a good deal. As you research online, you will find that there are many factors to consider when looking for a market.

Is the market on a decline in home prices?

Do homes just sit on the MLS in the market?

Are there people lining up to rent in a particular market?

Are there available jobs close to a specific town or is the school district one of the best around?

Being proactive in finding a suitable market is critical in the world of real estate investing. If your market is not suitable for REI, don’t let it be your excuse for not investing in real estate. David Greene of Bigger Pockets lives in San Francisco but invests in real estate all over the United States!

Real Estate Investing Dont’s – Pay a Furu or Beg for a Mentor

One of the most annoying types of posts you can find online is someone begging to be mentored when it comes to real estate investing. There are furus (fake gurus) all over the internet that will tell you that to be successful you must spend a couple thousand dollars on their system and attend their webinars regularly.

Sorry to break it to you but more often than not, the investors I know put in the time to learn the trade and do the dirty work on their own. If you genuinely want to be successful, you need to have a mentor find you. A mentor will only work with you if they see the value they can gain from helping you out. Attend local real estate investment meetings and put it out there that you want to learn about real estate investing. Let it be known that nothing will stop you from being successful.

If you get a flat tire, don’t stand there on the side of the road waiting for someone to stop. Get outside and start fixing your flat. People are more likely to help someone who is trying to help themselves.

Real Estate Investing Do’s – Partner with and Learn to Help Others

If you want to go fast go alone but if you want to go far then go together is a saying that has a strong resignation with real estate investing. If you do not have a strong team behind you then the road will be rockier and probably take longer to get to your destination.

You do not need a team set in stone but have people lined up that you will reach out to when a problem may arise. Some members of my team are my:

Real Estate Agent – Our agent has been our best asset so far in this journey but I recently got my license so we can save on commissions and get deals that much sooner!

Accountant – Everyone loves to save money come tax time.

Lawyer – Why put yourself in a legal pickle you don’t need to be in the first place?

Contractors – Even though we currently do a ton of repairs on our own, having a licensed contractor who can perform significant tasks or offer insights is excellent.

There are other members of a team you might come across but at least have the above in mind. Nothing is worse than getting to an obstacle and having no direction on how to overcome the hurdle. Better yet, having a good team can help you avoid common mistakes before they even happen.

Conclusion

Everything in life is a calculated risk and investing in rental properties is no different. When it comes to investing in your financial future, you need to take the necessary steps to put your odds of success in your favor.

Put in the time to learn the trade of REI. Every day try to understand a new or old concept just a little more than you did the day before. Go to meetup groups and connect with people who are doing every day what you want to do someday. The only thing stopping you is the voice in your head telling yourself that you cannot succeed in real estate investing.

Get to Know Alex!

Alexander Flores is a high school math and programmer teacher from the Jersey Shore. Alex has been investing in real estate for three years and recently closed on his third investment property, with it being his second rental property.

Alex also runs a soy candle company, Masonjarcandlesco.com with his family and runs FinanciallyFreeMillennial.com to teach others about bettering their financial well-being. He recently also became a licensed real estate agent in NJ as well. You can reach Alex through his website or by emailing [email protected].

Follow him on social media!

Instagram

Twitter

Facebook

Final Thoughts

If you want to learn more about real estate investing, make sure you reach out to Alex and follow him on his social media channels above!

Drop a comment below if you’ve had any experiences(good or bad) with real estate investing!

Cheers,

Robert