Berkshire Hathaway’s CEO Warren Buffett, notably one of the wealthiest people in the world, has two simple rules when it comes to investing. He’s credited for saying, “Rule number one: never lose money. Rule number two: never forget rule number one.”
Whether you’re brand new to investing in real estate or a seasoned investor, there are four undeniable truths you need to know.
There’s a common misconception that you need money to begin investing in real estate. This simply isn’t true. With the right knowledge, you can start investing with no money out of pocket. However, having access to capital can make investing easier, especially in regards to expanding your options. Just because you have the money to invest in real estate doesn’t mean you know how to invest. One of the worst ways to begin your real-estate investing career is to just go out and start buying properties without the proper knowledge. Take the time to learn how to properly invest and you’ll minimize your risk of losing money.
Technology has made it extremely easy to access information. Gaining knowledge on any subject can be as easy as a simple internet search. Real-estate investing is no different. Many newcomers to investing have the misconception that watching a few videos online will make them a real-estate investor. The truth is, unless you’ve taken the time to be properly taught, you still lack the necessary experience to ensure you’re making the right decisions. In this day and age, there is an enormous amount of free information circulating the internet. Visiting YouTube university is a great place to learn the basics and theory of investing. But before you actually begin investing, you should take a few courses or seek a qualified mentor to guide you.
Just because you have some experience in one specific type of investing, doesn’t mean you know how to invest in real estate. Your experience in one style of investing may not translate into another. Take stock investing for example. I’ve seen several successful day traders lose thousands of dollars investing in real estate simply because they lacked the expertise in this area of investing. The foundations of all investments are basically the same, but the fundamentals differ. An expert stock trader could be a novice real-estate investor. The techniques, tactics and methods for acquiring a profitable real-estate deal require particular knowledge and experience in real estate.