5 Simple Steps to Start Investing Like a Pro – Episode 1024

If you want to become a real estate investor, but you’re not sure where to begin, this episode is for you. I’m going to walk you through five simple steps you need to take to begin investing in real estate.

I know from experience that when you’re trying to make the jump to becoming an investor, it can be easy to get caught up in the weeds of things that ultimately don’t matter. So get ready to take notes, because you’re about to learn five simple steps to start investing like a pro.

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1. Set a goal. Having an end goal in mind is going to be instrumental to your success. Just like any sort of career or fitness aspiration, having a clear goal will keep you on track and motivated. I recommend starting with my Freedom Cheat Sheet. It’s a simple PDF designed to help you understand your finances, and then set a clear-cut goal that will help you reach financial freedom. Download the cheat sheet for free at morrisinvest.com/freedom
2. Consider your financing options. There are endless options when it comes to financing real estate investments. Will you use a traditional mortgage, or do you want to buy real estate inside a retirement account? Are you going to leverage home equity to buy a rental property? Do you have cash available, or will you be working with a private lender? Lay out all of the possible avenues you could pursue and determine which one is the best move for you right now. Know your options and map out a few different financing strategies. You will also want to get an understanding of what your current financial snapshot is, especially if you plan to apply for a loan. Assess your income level, credit score, and debt-to-income ratio. Also consider how buying a rental property might impact your overall finances. The more prepared you are, the easier the process will be.
3. Find a rental property. There are multiple ways to buy an investment property, and it honestly depends on what you’re looking for. This is where assessing your goals and your financing options comes in. You want to buy a property type that is going to help you reach your goals and makes sense for you financially. Here’s a short list of ways to buy a rental property:
   -Work with a local realtor who understands real estate investing
   -Discover seller-financing properties in your area
   -Find deals through your local real estate meetup group
   -Utilize online resources like Realtor.com, Facebook marketplace, & Zillow
   -Work with a full-service real estate company
4. Run the numbers. Don’t skip this step, it’s crucial that you run the numbers on a deal. There are multiple formulas you can use: the 1% rule, ROI, cash-on-cash return, and so on. I like to use a formula called IRR, or internal rate of return. IRR is the annual rate of growth expected on an investment. IRR encompasses cash flow, principal reduction, and appreciation. You can watch my full video on IRR here. I prefer calculating IRR over other formulas because I find that it’s more in-depth and helpful. Look for double digit returns, and don’t forget to include other costs.
   You’ll want to make sure you’re considering other expenses you might have in your property. Does the property have an old furnace that’s hanging on for dear life, or are all of the components new? Do you have an HOA payment? What will your mortgage and insurance payments look like? Take the time to run the numbers, and then run them again to ensure you’re making a solid investment.
5. Take action. As long as the numbers make sense, go for it. This is the hardest part, but the most gratifying. You’ve done your due diligence, and you know this is something you want. You’re the only one who can make it happen, so take action. At Morris Invest, we like to say “don’t wait to invest, invest and then wait.” This is because getting into the investing game sooner rather than later always pays off. The sooner you get started, the sooner you’ll grow your net worth, build equity, and reach financial freedom.

Episode Resources

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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

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