1
Have a plan.
What area are you looking in? What is your budget? How are you going to use the property? What is your timeline? Do you have a realtor? Are you pre-approved? Are your finances in order? Do you know the regulations in your area? What kind of risk can you tolerate? What are you NOT willing to do? On your first deal, don't bite off more than you can chew, but the more you get specific on what you want, the more in alignment you will be with finding it.
2
Logical vs emotional.
This is a business decision completely opposite from buying a house to live in. Don't let your emotion influence your decision-making process. Always overestimate what it's going to cost and underestimate what you expect to make in return. It's always better to be conservative here; you'll thank me later.
3
Have a backup plan... or two.
What are you going to do if the house doesn't rent or a huge problem arises? Or worse, what are you going to do if you have to get rid of the house quickly? Real estate is a physical asset that gives you options but you have to be prepared to take control if the circumstances change.
4
Be financially ready.
Second homes and investment property loans are different than traditional mortgages. Most lenders will require 15-20% down in addition to closing costs. Nothing wrong with buying in cash but always factor in how long that money will be tied up before committing it. If you're planning on rehabbing or furnishing the home for an Airbnb, do you have a solid projection of costs? Where is your line in the sand that you are unwilling to cross? Be mindful of deals that feel exciting but get close or cross over that line.
5
Know your why.
Most people don't buy real estate because they always dreamed of being a landlord or Airbnb host. Do you desire financial freedom or did you just see an Instagram reel about how owning an Airbnb is a passive investment to make you rich? Be realistic in your goals and realize one deal is unlikely to solve all of your problems. Little wins lead to big wins; be pragmatic and committed to why you are doing this in the first place.
6
Don't listen to the naysayers.
There's always going to be some unqualified joker out there telling you how it isn't going to work. On the flip side, lean on experts and people who have actually done the things you are trying to do. Success will always leave clues. Your network is vital so be mindful of who you listen to. I would highly recommend having a seasoned realtor that is familiar with the investing process, hint hint wink wink.
7
It's never passive.
Myth: real estate is a passive investment, and you'll be able to buy a few rentals and then live your life sipping pina coladas on a beach somewhere. WRONG. Sure, you can set up real estate to be mostly passive if you have someone else doing it all for you, but that comes with a cost. Managing real estate may be less tedious than your job, but it will still require you to work. Lazy real estate investors make lazy profits.
8
Keep track of everything.
You can never be too organized! From planning, implementing and repeating, it will always pay off to have great records. When you track everything, you can actively improve on your next efforts and you will be one step ahead for your next venture. This part may not be fun, but it's certainly better than trying to digitally recreate everything when it comes time for tax season.
9
Be prepared for the unexpected.
On the first investment property I went after, I ended up in a business partnership and sharing a mortgage with a close friend. Lucky for me, we ended up making great business partners, but it could have been a major risk. Even riskier, we didn't have a backup plan and went after a house nearly 200% of our initial budget. This home was intended to be an Airbnb and we assumed the HOA would allow it because the covenants hadn't been updated since the 70's. One guest in, the neighborhood pushed to ban STVR in the neighborhood and we were left dumbstruck. Luckily, we got a fantastic deal on the front end and the renovations we completed forced quite a bit of appreciation to the home. We were able to dodge a bullet and sell with a profit, but I'd be lying if I wasn't terrified of losing big time. Never again, I learned.
10
Take the leap.
I've always said you have to be ready to jump twice when you make your first real estate investment. You have to be ready to financially commit to the plan and risk your hard-earned money. Then you also have to take that first leap of faith and do something you've never done before. This process is scary and the first step is the hardest, but remember, as Wayne Gretzky said, "you miss 100% of the shots that you don't take". Good luck and let's get that first deal done!