Many people say that they want to invest in the real estate market, but only a few have the right mindset to become a successful real estate entrepreneur. If you think you might be in that group, keep reading. We've laid out the steps that you need to follow to build your real estate portfolio into a thriving business below. By taking these steps, you should have the knowledge you need to get started on your journey.
What is a real estate entrepreneur?
Above all, a real estate entrepreneur is someone who pursues a real estate career. However, rather than simply becoming a real estate agent or a part-time investor, an entrepreneur seeks to continue to build their real estate portfolio until it becomes a thriving business in and of itself. Typically, once they've become established a successful entrepreneur, they'll dabble within multiple niches in the real estate industry, including residential real estate, commercial real estate, and property management.
Many real estate investors seek to become entrepreneurs because this is a way to build a substantial amount of wealth. After all, it's not uncommon for successful real estate investors to become millionaires. That said, beyond offering plenty of earning potential, this type of real estate career is also fulfilling for most of those who have managed to capture an entrepreneurial mindset.
How to become a real estate entrepreneur
Now that you know more about what a real estate entrepreneur is, the next step is to learn how to become one. Since this is a beginner's guide on the subject, some of these steps may seem self-explanatory, but they are crucial for building a solid foundation for your real estate business.
Get a real estate education
Before you can get started building your real estate business, the first step is to get an education. While many people might assume that this means going to college to get a four-year degree, that is not necessarily a requirement to become a real estate investor. Some four-year colleges and universities do offer real estate programs, so if that type of education works for you, feel free to explore those options.
Still, if college is not for you, there are plenty of alternatives as well. You could, for example, take an online course given by a successful real estate investor. Alternatively, like many real estate professionals, you could try a real-world approach and get your real estate license.
Find a mentor
No matter what educational path you take, once you've completed your credentials, we recommend finding a mentor who works in the real estate industry as an investor. Put simply, a mentor will be able to help you learn the practical aspects of managing your own real estate business and will help you take on the right mindset to become a successful real estate entrepreneur.
Luckily, there are also plenty of the avenues you can use to find a mentor as well. If your educational program does not have a mentoring collective in place, you can look towards a coaching arrangement. You don't necessarily even have to follow a traditional one-on-one coaching model. These days, many online courses have Facebook groups where you can ask questions and receive advice from peer investors.
Beyond that, you could also try and work for an existing real estate investment company in your area. Again, this will give you the type of real-world experience that will be Irreplaceable once you're ready to start your own business.
Set some goals for your real estate business
Once you feel that you know enough to get started investing on your own, the next step is to start setting goals for your real estate business. In this instance, you have to be specific about the goals that you set. For example, rather than just saying that you want to make money through real estate investing, it's important to delve into the details, which might include:
- How much money you want to make.
- The date by which you want to achieve your goal.
- The real estate investing strategy that you intend to use to achieve your goal.
- The specific action steps that you need to take to get started.
Pick a real estate investing strategy
After you've gotten clear on goals for your business, the next step is to pick a real estate investing strategy. At its core, your investment strategy is the method you intend to use to generate real estate income. In general, there are six real estate investment strategies you can choose from. They are as follows:
- Buy-and-hold: A buy-and-hold strategy involves buying a rental property, finding a tenant, and renting it out in exchange for regular cash flow. Typically, this strategy is thought of in a residential real estate context. However, it can also be used with commercial real estate.
- Short-term rentals: This strategy involves using a platform like Airbnb or VRBO to rent out your property to short-term guests.
- Fix-and-flip: Also known as "flipping houses," this strategy involves buying a property that is undervalued for the market, renovating it, and selling it quickly for a profit.
- Wholesaling: Like a fix-and-flip strategy, wholesaling involved buying distressed properties from motivated sellers. However, instead of renovating them, you simply turn around and sell them quickly to an end buyer for a marginal profit.
- Real estate investment Trusts (REITs): if you're working to generate passive income, investing in REITs might be the right strategy for you. It involves buying shares of these companies like you would buy stocks and receiving dividends when they make a profit.
- Crowdfunding: In this case, an experienced real estate developer will likely have zeroed in on a good investment opportunity but won't have the capital to make it happen on their own. They will use a crowdfunding platform to pool money from interested investors and, in exchange, will give them a share of any profits.
Here, the more specific and detailed you can be when setting your goals and investment strategy, the better. In fact, more than one successful real estate investor has recommended creating a real estate investment business plan when getting started. In practice, the business plan will act as a roadmap to guide your decisions toward achieving your goals.
Seek out your first investment opportunity
After you've decided on the right real estate investment strategy for you, the final step in this process is to seek out your first investment opportunity. Whether you choose to rent out a commercial property like an apartment building or to generate passive income through crowdfunding or investing in REITs, you'll want to take the time to thoroughly vet a few opportunities before making a move.
However, once you’ve found the right opportunity to get started, it’s all about duplicating the process to expand your portfolio even further. If you follow these steps, before you know it, you will be a successful real estate entrepreneur in your own right.
The bottom line
Truthfully, becoming a successful real estate entrepreneur won't happen overnight, but, with a little hard work and a lot of due diligence, many real estate investors are able to build careers as real estate entrepreneurs. With that in mind, use this guide to help you get started on the process. Armed with this knowledge, you should have a better idea of what steps you need to take in order to get your real estate career off the ground.