Last Updated on February 25, 2022 by Mark Ferguson
Real estate investing can be an amazing way to build wealth. While it offers many opportunities and can make people a lot of money it can take some time. I have been investing in real estate for almost 20 years and success did not come overnight. If you want to become a successful real estate investor, you are going to have to work for it. It took years for me to find my niche and really build wealth but I also started before there was so much information on being a successful real estate investor. I learned mostly from trial and error and a few books. I have seen other investors take years as well or become successful in a few months. It is pretty rare that someone becomes an overnight success in real estate but there are many things you can do to shorten the journey to success.
Why does it take so long to become a successful real estate investor?
When I talk about real estate investing, I am not talking about buying a REIT or lending money to another investor. I mean buying real estate and the direct principal party. It is much quicker and easier to buy a REIT, lend money, or invest in syndication, but you usually won’t make nearly as much money or have all the other advantages that come with buying real estate directly.
When you buy real estate directly, it takes time.
- You will need figure out what type of investing to do
- You will need to figure out how much money you need
- You will need to save up the money needed to invest
- You will need to figure out where to invest
- You will need to find properties and purchase them
- You will need to possibly repair the properties
- You will need to sell or manager the properties
I hope this list did not freak you out. It may seem like a lot but once you get involved and learn how it all works it is doable. Yes, it is more difficult than many investments but the results are usually well worth it. Results vary greatly but real estate made me about ten million dollars the last ten years after starting with very little (remember I said it took me a while to find my niche).
How long does it take to prepare to invest?
Investing in real estate takes time but so does the preparation. It took me a while to learn what I wanted to do and how to do it even though I was in the real estate industry and a licensed real estate agent.
I read books and researched many different investments before I decided on real estate. I suggest you do the same as well! That process took me at least 6 months and then I had to decide exactly how I would invest. I decided rental properties were the best option and it took me a few months to do that research. I then had to research my local market, figure out what I would make on properties, and see if rentals would work in my area.
I was lucky that rentals worked where I was (Colorado in 2010), but things have changed a lot in the last ten years or so. If rentals do not work in your area you may have to look at other markets or figure out if different types of rentals work in your market. I switched from residential single-family homes to commercial rentals.
I know this all sounds like a lot of work and it is, but this is your money and future we are talking about. You should be doing the work and spending the time to figure it out. You spend years figuring out a career and going to school to gain skills for a career. Investing is often more important than your career if done right!
How does the time it takes to start vary with different types of real estate?
Not only can it take a while to learn how to invest in real estate but there are many different types of real estate to invest in and each one is very different.
We have done more than 200 house flips and I love flipping but it can be risky and take a lot of time to learn! Even after 200 plus flips, I am still learning things! A lot of people get started flipping without much time spent learning about flipping and it shows. While you make more mistakes starting out right away, it is not the worst strategy as long as you understand you may lose money and are paying for an education. many of the best flippers I know lost money on their first deal or two.
If you want to flip houses please learn a little before you jump in. Learn what all the costs are, what financing options you have, learn your market (most important), and do not blindly trust others. To flip a house, it may take 6 months to do the proper research, read the books, and watch the videos before you feel comfortable jumping in. Then you may take another few months to find a deal, and another 6 months more to repair it and sell it. As I said, real estate is not for the get-rich-quick crowd.
Rental properties can take even longer to learn about than flips because the markets vary so much for rentals. You can flip in any market, but with rentals, you have to look at rent to value ratios as well and every market may not work.
While it may take longer to learn about rentals, it should take about the same amount of time to fix up a property, if needed, and get it rented. You may think it would be easier to rent a home than sell it, but in the crazy market, we have now it can take more time and effort to rent homes.
Another thing that can add to the timeframe is the management of a rental property. When you flip houses, you don’t have to worry about them after you sell, but with rentals you do. You need to learn about property management or take the time to find a great property manager for the property.
Wholesaling real estate
Real estate wholesaling is often taught as a get-rich-quick business that can make millions with very litter money. I know many successful wholesalers, but they did not get rich quickly! They spent a lot of time building an awesome business with many ups and downs along the way.
Real estate wholesaling is when you find a deal, get that deal under contract, and then assign the contract or use a double close to sell the property to another investor. One of the big advantages of wholesaling is that you do not need to repair the properties or manage them. This can greatly reduce the time it takes to make money on a property. The profits are usually smaller per deal and it can take just as long to learn how to wholesale.
The key to being a great wholesaler is finding awesome deals. The deals have to be even better than those a flipper or landlord gets because the wholesaler needs to make money as well. It also takes money and time to find those deals, they do not just fall in your lap. You may be able to start wholesaling right away, but it takes 6 months to learn the business and can take months to find that first deal. I have seen some wholesalers get lucky right off the bat but those are the outliers.
How can you get started faster with less risk?
I know this may sound like a lot of work and a lot of time but so are most things worthwhile in life. Time also goes faster than you think and real estate has proven over and over to be one of the best wealth builders there is. If you want to shorten up the time it takes to learn and invest in real estate with less risk there is a way!
To invest quicker you can buy an investment property to live in. This takes some sacrifice and not everyone is willing to do it but it can give people an amazing headstart.
- Find a great deal that can be financed with an owner occupant loan
- Buy the house and live in it a year or whatever is required by that loan
- Slowly fix up the home, if needed, while you live there.
- After the year is up, sell or rent the house, and repeat the process again.
Why does living in the house a great way to start? For one thing, owner-occupant loans have much lower down payments and allow people to start investing sooner because they don’t have to spend all that time saving money. You are also killing two birds with one stone. You are living in the investment and if things don’t go perfect you still had a roof over your head and owning is almost always better than renting for building wealth.
You also can buy a house to live in without learning quite as much about rentals or flips before you start. It is still a good idea to learn as much as you can, but it’s a lot less risky to try this out on a house you live in. You are not under pressure to sell it or rent it right away if things do not work out how you envisioned.
How can you learn about real estate investing?
It is a good idea to learn as much as you can but there is also no substitute for experience. I read many books, studied my market, and went over all the costs before I bought my first rental. When I was learning YouTube was not as big and there were not as many real estate teachers. I also was stubborn and wanted to learn it all on my own.
I have many resources that are free and paid if you want to speed up the learning curve. There are hundreds of articles on this website and a free book if you sign up for our email list (that will also send you the most important articles). I also have 9 books on Amazon that go over a ton of information and case studies on how to invest in different types of real estate.
My YouTube channel shows all of my flips and rental properties as well as the repair process. We usually have at least 3 ned videos a week!
I have coaching programs on my resources page as well if you are interested. If you don’t think I know what I am doing, there are tons of other really good coaches and people to learn from in the real estate field as well. I highly suggest not trying to learn it all on your own as it takes much longer and you repeat mistakes that could have been easily avoided.
It takes a while to become a real estate investor! It might take a year or longer before you buy your first property. It could happen sooner, and buying a house to live in is one way to do that but don’t lose faith in yourself or the process because it takes longer than you think. I am a very impatient person myself, and it can be frustrating having to wait for deals and remodels to complete and to find the perfect renter, but it is all worth it!