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Education in Real Estate Investing – First Step for Creating Real Estate Wealth
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In the first part of this article (beginning real estate investing) I discussed how I got started in real estate investing. Now that I had experienced the power of real estate investing I wanted to use it to build real estate wealth. But where to start?
The answer to this was simple…education, education, education!
That seems obvious now, but at the beginning it was not. I thought the place to start was getting a loan and finding a cheap property I could rent to someone. But I have thankfully learned that in this business nothing will get you into trouble or make you lose money faster than not knowing what you are doing.
What about risk? I used to think real estate investing was a risky proposition. Many people, family and friends included, share this belief about real estate investing and/or they don’t want to deal with tenants. Here lies the ultimate purpose and importance of education: to minimize risk and eliminate fear.
|“Formal education will make you a living; self-education will make you a fortune.”
- Jim Rohn
Your objective when starting your education in real estate investing is to get a basic understanding of what real estate investing is about and the different ways of making money with real estate. Renting out properties is not the only way to make money in real estate.
Things You Need to Know
Your education in real estate investing will need to cover many topics. You could spend months in each of these but right now what you want is to get a general understanding. Once you form a big picture image of what real estate investing is about you can choose an area of investing you would like to start with.
These are some of the topics you want to learn about:
- Types of residential real estate investing – single family homes, multi-unit, apartments, mobile homes, etc.
- Real estate law in your area
- Financing and mortgage lending
- Commercial real estate
- Land investments
- Short sales
- Foreclosures and foreclosure process in your area
- Lease options and lease purchases
- Property management and landlording
- Staging for selling or renting
- Building your team – contractors, attorneys, lawyers, banks, lenders, agents, etc.
- Factors for property selection
- Basics of real estate accounting and investment calculations
- Real estate taxes
Just to name a few…
I know, I know…it sounds overwhelming. It did to me, but not to worry you don’t need to know everything right now. What you want is to be able to make a choice of where you are going to start. Time and experience will take care of the rest!
Remember, right now you want to educate yourself enough to stay out of trouble and to overcome the fear that comes out of ignorance so that you can take that first step.
Sources of Education in Real Estate Investing
“Where do I find all this stuff?” … You might ask.
That’s the good news. The first step in your education in real estate investing is easy and the sources of education are abundant. Are you ready for the first step? Here it is: Get a library card!
That simple card has given me my biggest return on investment
ever. Nothing will get you started on the right foot better than educating yourself using reliable sources that provide valuable information. The library can provide many of these for free.
I will recommend you spring for the following titles first in order to give you a comprehensive overview of the world of real estate investing:
- Real Estate Investing for Dummies, Eric Tyson and Robert S. Griswold. Don’t be ashamed of the title, this book gives an excellent view of all the aspects involved in beginning real estate investing. I still refer to it 3 years after I first read it.
- The Millionaire Real Estate Investor, Gary Keller. Packed with a lot of information on all aspects of the business. This book can be overwhelming but it really provides a great perspective on how you can begin with one simple property and turn it into a full time business.
- Building Wealth One House at a Time , John Schaub. What I like about this book is how simple it explains everything and how it promotes starting small and taking it one step at a time.
I would suggest you make an appointment with yourself every morning to read these books. With two children and a full-time job the only time I could find to go through these was at 5:30 am.
I have been fortunate that my library system carries a huge assortment of titles for education in real estate investing. I don’t buy every book I read, instead I look it up in Amazon and then order from the library. If I like it after I read it then I purchase it used to keep it for reference. I have gone through several dozen books this way.
If your library does not carry them, check and see if they are affiliated with an e-content provider such as Net Library. Believe me I used this system when I lived in North Dakota because the library system there was very limited. If they can get there they can get anywhere!
Another great source of education that is incredibly efficient is audio books, MP3 downloads and podcasts. When I had a forty minute commute to work. I put this time to good use by going through dozens of recorded programs that provide education in real estate investing and related topics.
Better yet, many titles in real estate investing are available in audio book format. In turn many of these audio books are available through the library. This has saved me hundreds of dollars since these are usually pretty expensive. I have gotten so much education in real estate investing through audio books that I listen to them not only in my car but while working out, doing chores around the house or when doing rehab work at any of my properties!
Podcasts and MP3 downloads are abundant. Some of my favorite podcast sources for education in real estate investing are: John Adams and North Atlanta RE Investors Association. There are a lot of podcasts out there just make sure you choose wisely.
Power in Numbers
The next stage in your education in real estate investing is associating with and learning from fellow investors. This can be done by joining your local Real Estate Investors Association (REIA) or a similar investors group.
This single action has had the most profound impact in my investing career. I cannot describe how powerful it is to learn from others that have been there, done that. To listen to their stories both good and bad - their profits and losses - problems and solutions. What is even better is the willingness of so many members to share their knowledge and help you out.
I have gained tons of knowledge and advice (both good and bad) that I believe has kept me out of trouble and has motivated me immensely. It has also been a great source for contacts from everything from attorneys to painters.
The benefit of a REIA is that it will open up your mind to the possibilities in real estate investing and it allows you to tap into the immense power of networking. In turn this allows you to begin the transition from not knowing how to do it to seeing how you too can do it.
One caution about REIA’s or similar investors groups; like almost every advice you are offered, you have to take it for what it’s worth and you have to judge where it is coming from. There are people in these associations whose intentions are less than honorable. Again, use your judgment and choose wisely.
Another thing you might notice at a REIA is that they might try to pitch educational products or systems from professional speakers. These products can range from $500 to $5,000+. The REIA provides a platform for them because profits from the sales benefit the REIA which is after all a non-profit association.
Here is my take on this; some of these products are very good, they really are but they are not as crucial as the person pitching them to you makes them sound. You can get started in real estate investing without spending money on these products but many of them offer great training and education in real estate investing so you will benefit from them.
You also need to consider two more sources for education in real estate investing: the internet and formal training.
The internet is an obvious choice or you wouldn’t be reading this article
but I would suggest that you use it cautiously. This for two reasons; first, real estate investing is local. For example, the foreclosure process in Georgia and California are completely different - home prices have fallen by 25% in Tampa but only by 4% in Atlanta - and so on. So when starting out you want to learn YOUR market. So what you read on the net might not work for you.
Second, there is a lot of bad information on the net and worst there are a lot of “get rich quick” and/or scams out there. My rule of thumb is to beware of anything that tries to give you the impression that real estate is easy and you’ll get rich quick, neither is true. In the end you have to use your best judgment.
Finally, also consider formal classroom or seminar training available in your area and online. Check with your local university or community college as they might offer continuing education courses in many aspects of real estate investing.
You can also find local speakers or experienced investors that offer either short or long seminars on different topics, which can be especially helpful if they talk about your local area.
Education in Real Estate Investing Action Steps
- If you don’t have one get a library card now! Then go and grab one or two titles, (preferably the ones I suggested above) and make a commitment to go over them, take notes and extract further action items from them. Don’t just get them and bring them home to read when you can. Give yourself a definite timeline to go through them, like homework.
- Go and find your local real estate investing group, it might be called REIA or it might have some other name but find it. Then contact them and see if you can attend a meeting or activity as a guest to check them out. This is common and will allow you to get a feel for the organization and see if it’s right for you.
- Look up continuing education curriculums at your local community college or university first. If there is nothing available then look up sources online.
- As you meet other investors ask them about sources of education in real estate investing they have used that they can recommend - whether books, CD’s, seminars, classes, etc. This way you can start creating an education “curriculum” for yourself.
- Create an education savings account. Perhaps your most important investment will be investing in yourself. Every month
set money aside in a separate account that you will use strictly for education. Whether it is a book I want to buy or attending the $500+ weekend seminar on buying foreclosures. I have found that setting money aside for this works wonderfully and that way I do not have the excuse “I don’t have the money now”.
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