Real Estate Investment for Beginners​


Investing in real estate may sound like something only wealthy people do, but you may be surprised to learn that anyone can invest in real estate, even with very little experience or disposable income. If you’re a beginner and you’re not sure how to get started, this guide is for you! Come along as we explore the exciting and lucrative world of real estate investment!

What Is Real Estate Investing?

Real estate investment involves purchasing, owning, and managing properties to generate income and build wealth. In general, income comes from owning rental properties, while wealth is accumulated by buying real estate and selling real estate and selling it for a higher price later on. Properties can be anything from vacant land to high-rise apartment buildings and can include farmland, industrial buildings, houseboats, tiny homes, and even treehouses and cave dwellings! Sounds like fun, right? Let’s dive into more information about the exhilarating world of real estate investment for beginners!

Why Invest in Real Estate?

There are many excellent reasons for real estate investment, including:

  1. Potential for Appreciation

While there are no guarantees, real estate has historically tended to increase in value over time. When you sell it, it will likely sell for more than what you paid for it. This is the case even for small plots of vacant land.

  1. Equity Building

Purchasing and holding real estate helps you build equity in your property. Even if you never plan to sell, that equity adds to your net worth and gives you more borrowing power because you can use that equity as collateral for loans and lines of credit.

  1. Income Potential

Buying an income property or renting out space in your home gives you a steady stream of income that you can use to pay bills, lower your mortgage payments, or add to your retirement savings.

  1. Investment Diversification

Having a diversified investment portfolio balances your financial risk by spreading it across different types of assets. For example, many investors will buy bonds to balance out more volatile stocks in their portfolio because bonds tend to be more stable. Real estate investment is an additional way to diversify your holdings because it tends to perform differently from other investments. An investor can also diversify within their real estate investments by buying properties of different types.

  1. Hedge Against Inflation

Property values and rental income tend to rise with inflation, which effectively minimizes the impact of inflation on your spending power.

  1. Financial Independence

If you eventually want to leave your current work, real estate investment offers that opportunity. With hard work, dedication, and sound investment practices, you can live a life that is yours to design.

  1. Retirement Planning

Real estate can be part of your retirement planning strategy. Rental properties can provide you with a steady income to supplement your pension or government-provided seniors benefits. Retirement may also be the right time to sell your principal residence and cash in on all the equity you’ve built in it!

What Qualities Should a Beginning Real Estate Investor Have?

There is no perfect profile for an ideal real estate investment professional, but many share these traits:

  • Entrepreneurial Spirit

As a real estate investor, you will be your own boss. How much you work, where you work, and when you work will be up to you. Self-motivation, independence, and decisiveness are all assets in this type of role.

  • Drive to Succeed

Real estate investors are rarely satisfied with the status quo. They are driven to grow, achieve their goals, and gain greater financial independence. Having this type of unstoppable motivation can lead to phenomenal results.

  • Curiosity About or Interest in Real Estate

This one may seem obvious, but as a real estate investor, you will need to do plenty of research. Having a strong interest in real estate means that you will be doing that research and acquiring knowledge without it feeling like work.

  • Eagerness to Learn

As is the case with many endeavours, a beginner will start by learning the essentials of real estate investment. After that, they should commit to continuous learning. There are always new rules and regulations, technologies, financing models, and strategies to learn about; successful investors stay abreast of these changes by reading industry news, networking, taking classes, and attending seminars and conferences.

  • Resourcefulness

Real estate investment can involve unexpected challenges and obstacles, such as tenant problems, financing complications, and damaging storms. Coming up with creative solutions and novel approaches can save time and money as well as inspire confidence in the investor’s skill set.

  • Relationship-Building and Networking Skills

Investors rely on other people for information, access to financing, referrals, mentorship and guidance, and much more. Growing relationships and developing a strong network are key to success in real estate investing.

  • Adaptability

Real estate markets can change over time, and unforeseen challenges may arise. Good investors are able to adjust their strategies when necessary without losing their overall focus.

  • Patience

Real estate investing is a longer-term commitment than many other types of investing. It requires patience to wait for deals to turn a profit or to start generating a steady income.

  • Emotional Resilience

Investing in real estate can be exhilarating and occasionally disappointing. Successful investors are able to ride the highs and ride out the lows while staying committed to their long-term goals.

Note that you don’t have to be born with these qualities to make real estate investments: you can learn or develop them over time, and some you will acquire just by being involved in the world of real estate investment. The most important thing to bring to the table is your enthusiasm, energy, and desire for greater financial independence.

Which Real Estate Investments Are Best for Beginners?

Beginners should start with the type of investment that is financially feasible for them and matches their level of knowledge and risk tolerance. For most investors, that will be an investment that doesn’t involve complex financing, analysis, or expertise. Here are some options that would be suitable for the typical beginner:

  • Buying a Home

Yes, purchasing your own home does qualify as a real estate investment! If you already own your home, you are already a real estate investor! With every mortgage payment you make, you are building equity in your investment and raising your borrowing potential. If you use part of your home for your real estate investment business, you may also be able to claim part of your mortgage and your utilities as business expenses on your taxes. Buying a home gives you much more than a place to live!

  • Renting Out Part of Your Home

You can build onto your investment portfolio by adding a rental suite to your existing home or even renting out a room. You can also consider offering your home as a short-term vacation rental property when you are out of town.

  • Buying a Cottage or Other Vacation Property

Buying a property that you can rent out is another very common way for beginners to get started with real estate investment. If you already own a second home, consider upgrading it to make it more appealing to potential renters.

Note that a vacation home does not need to be an expansive estate on a large lake with a beautiful view; it can be an apartment in a city that is popular with tourists or a small rural property. Look around to see what types of dwellings are offered on popular vacation rental sites; this will give you an idea of what renters expect from this type of property. Be mindful of local laws and regulations regarding short-term rentals to make sure that you are within the guidelines.

  • Wholesaling Real Estate

Real estate wholesaling is a strategy that involves very little financial outlay. Wholesalers look for properties that will likely sell below the market value because they are in poor repair or because the owner is highly motivated to sell. These properties are often called “distressed properties.” The owner makes an agreement with the wholesaler to find a buyer for the property at a contracted (guaranteed) price.

When the wholesaler locates a buyer, and the sale is complete, the wholesaler keeps the difference between the contracted price and what the buyer actually pays for the house. This type of investment has the advantage that it requires no capital other than the cost of marketing and any minor repairs that are needed to sell the home.

  • Flipping a House

Flipping houses is an increasingly prevalent real estate investment strategy. Beginners can certainly undertake a flip if they have renovation expertise. Investors with little or no renovation experience can partner with someone who does have these skills, such as a general contractor or a real estate agent with a good professional network.

  • Buying Into a Real Estate Investment Trust (REIT)

Real estate investment trusts (REITs) are companies that own, operate, or finance income-producing real estate. They are similar to mutual funds in that they are professionally managed by industry experts. REITs allow investors to benefit from the experience of people who are highly knowledgeable about real estate markets, trends, financing, and so on.

REITs are publicly traded on stock exchanges in the same way that other securities are, making them very straightforward to purchase. These trusts are also subject to regulatory oversight, which means that they are low risk compared to many other types of real estate investments.

  • Investing in Vacant Land

Vacant land is readily available, even within city limits. It makes a great real estate investment for beginners because you can hold it while it appreciates in value without having to do much maintenance, deal with rental agreements, or handle tenant issues.

Vacant land is more affordable than property with a dwelling on it, and the taxes are lower. Overall, it can be much more accessible for an investor who is still learning or has lower risk tolerance.

What are the Downsides of Real Estate Investment for a Beginner?

Although real estate investment has many advantages, it is important to be aware of the potential pitfalls and risks. Familiarizing yourself with these downsides will help you determine the best approaches and strategies for you and what you need to learn before you jump in.

  • High Capital Requirement

Some real estate investments require significant capital upfront. This may not be suitable for people looking for low-cost opportunities.

  • Initial Time Investment

It can take a considerable amount of time before a new investor sees a return on their investment or starts to earn a steady income. Beginners should be prepared for this eventuality. For those without a financial cushion, a good strategy is to start with a small project while continuing to work a regular job. You can also partner with someone with more experience to decrease your financial commitment and spread out the risk.

  • Lack of Liquidity

Unlike stocks and similar investments, real estate is relatively illiquid, meaning that it takes time to sell it if you need to. One exception is REITs, which are traded on stock exchanges and can be sold as easily as stocks can.

  • Property Management Challenges

Rental properties require maintenance and repairs, as well as dealing with tenant concerns and complaints. This can be time-consuming and overwhelming for beginners. However, investors can hire a property management company to handle these day-to-day tasks for them.

  • Unpredictability

Some aspects of real estate investing are difficult to predict precisely. Economic downturns, market volatility, unexpected expenses such as major repairs, and the financial risk itself can be stressful for the beginning investor. Diversifying your investment portfolio with other assets and even other types of real estate can help make income and returns more predictable.

  • Initial Learning Process

Learning the ropes of real estate investing can be overwhelming for beginners. Taking courses, accessing educational resources, finding good mentorship, and having a financial buffer are all valuable strategies for the new investor.

The “cons” of real estate investing can be discouraging, but there’s no need to jump in with both feet right away. Take the time to learn the basics, meet other like-minded people, do lots of reading, and build your network. There are plenty of resources available for free and people who are eager to share their knowledge with you. Above all, stay focused on your financial and mental health along the way.

What Do Beginning Real Estate Investors Need to Learn?

Success in real estate investing starts with building a strong foundation of knowledge. Before you dive in, you will want to learn the basics. Here are the main things a beginner should learn:

  • Types of Real Estate Investments

Learn about the full range of properties and funds available, including residential real estate, multi-unit rental units, industrial properties, commercial rental units, vacant land, and vacation properties.

  • Ownership Structures

There are many ways to hold real estate and to share ownership, including as a sole owner, in partnership with one or more others, under the umbrella of a business such as a limited liability company or a corporation, within a trust, and through a real estate investment cooperative.

  • Investment Strategies

Before you buy a property, you should have a plan for what you will do with it. Learn about the key investment strategies, including buying and holding, flipping, and wholesaling.

  • Financing Options

Explore the different ways you can finance your real estate purchase, including standard options such as mortgages and loans, as well as less typical financing methods such as seller financing, lease-to-own agreements, and equity partnerships.

  • Taxation

To build your overall financial picture, you will need to understand the tax implications of different investments. This will include such topics as capital gains, potential deductions, and tax incentives.

  • Market Research

Before you invest, you will want to research the real estate market overall and any specific areas you are interested in. Learn how to access and analyze information such as zoning regulations, property values, vacancy rates, employment rates, and average rents.

  • Selection Criteria

Choosing a property is rarely as simple as the “Three Bears” model in home renovation shows. You will have an extensive range of options, each with its own pros and cons. Learn about the criteria that are most commonly used to land on good investments. These include location, potential for appreciation, rental rates, walkability, and property condition.

  • Budgeting

You are in this to make money, so make sure you are on track by developing a budgeting process. Figure out how much you can afford to invest and what your rental income and expenses will be. New investors often overlook expenses that are not part of their own household budgets, so learning about all the possible cash outlays is key to successful investing.

  • Financial Analysis

Budgeting is essential to tracking the status of your investments, but you will want to go deeper by calculating their profitability. Examine essential concepts such as return on

investment (ROI) and cash flow projections, and learn how to use these figures to your advantage.

  • Property Management and Landlord-Tenant Regulations

If you plan to buy a rental property, you will be responsible for the maintenance of the property, including major repair projects and emergency repairs. Learn about what is involved in being a landlord, including approving rental applications, handling tenant relations, and dealing with disputes.

  • Networking, Relationship Building, and Mentorship

Growing your professional network is a priority for new investors; a great deal of your success will depend on these informal relationships. People in your network can help you find properties and financing, connect you with other professionals such as tradespeople and property managers, and give you information, advice, and mentoring. As you progress, you will find that a large, diverse network is essential to being a successful real estate investor. Learn the best ways to grow your network right from the start!

  • Ethical Considerations

Avoid conflict and potential legal action by learning about the ethical guidelines for real estate investors, including such matters as conflict of interest, privacy and confidentiality, and non-discrimination.

This list of learning objectives may look daunting, but many of these topics can be covered in a few courses and some you will learn in the process of making your first deal. Remember that you do not have to jump into the deep end with both feet: you can begin with small projects with a mentor or a more experienced partner. The important thing is to commit to continuous learning so you are always at the top of your game.

About Keyspire

Real estate investment beginners have many options for learning the basics. Keyspire can help you get started with all the training you will need.

Start with our high-rated Masterclass, where you’ll learn the five things that successful real estate investors do consistently. The Masterclass will give you key insights you need to decide if you want to go forward. Best of all, this 4-star introduction to real estate investment for beginners is free of charge!

Advance to the next level of learning with Keyspire’s live, interactive 3-day or 2-day accelerated Bootcamp. In this information-packed event, your learning will truly be underway, and you will have stimulating opportunities to apply what you’ve learned. You will leave this experience feeling confident and prepared.

Since we want you to have a strong, resilient network, we invite you to attend our action-packed 3-day Investor Summit. While attending informative seminars, workshops, and social events, you’ll be able to connect with others who are on the same journey, get insights from experienced people who have achieved financial independence through real estate investment, and build valuable and meaningful relationships with a diverse range of other professionals! Reserve a spot for this energizing premium event!

Keyspire also offers tailored coaching through one-on-one sessions with our certified real estate investment experts. They will assess your goals, needs, and skills to provide you with advice that will help you overcome specific stumbling blocks and other challenges. They will also give you access to a suite of tools to guide you along your path to real estate investment success!

Fifty thousand new real estate investment enthusiasts join our training sessions every year, and through them, we have built an impressive community of over 100,000 engaged investors. At Keyspire, we are not about competition: we are about coaching, training, and building networks that benefit all our member real estate investors. Your future awaits—join us by signing up for one of our fun and informative events today!