Getting started in real estate investing can feel overwhelming, especially if you’re not working with real estate every day. I recently worked with a client who was an executive at a large company. Their financial planner had advised them to add some real estate investments to their portfolio for diversification and tax benefits, but they had no idea where to begin.
This is very common. When you’re new to real estate, it can be difficult to know what to buy, how to structure your investment, or even what questions to ask. But there are a few simple steps that can help you move forward with confidence.
1. Build the Right Team
No matter how familiar you are with real estate, it is essential to surround yourself with a strong team of qualified professionals. The people you rely on will keep you out of trouble and help you understand the details that could derail your investments.
You team should include:
- A knowledgeable CPA
- A great attorney
- A property manager, unless you plan to manage the property yourself
- An experienced real estate broker
Together, this group will help you shape your strategy, evaluate opportunities, and make sure you are set up for long-term success. Once your team is in place, you’ll be ready for the next step.
2. Define Your Objective
Before you buy anything, take a step back and think about why you’re investing in real estate in the first place. Every investor has a different motivation, and your reason will guide the type of property you choose.
For the client I mentioned above, the goals were diversification and tax benefits. They were a high-income earner, so tax-sheltered income was especially valuable to them.
Other investors may have very different objectives:
- Some receive a lump sum of cash and want immediate cash flow they can live on.
- Others want long-term appreciation.
- Some want a mix of income and tax advantages.
Whatever the motivation is, start with the end in mind. Once you know what you want your investment to accomplish, it becomes much easier to narrow down your options.
3. Know Your Comfort Level
Your comfort level plays a bigger role in investing than many people realize. A property might look great on paper, but if it keeps you awake at night worrying about tenants burning it down, that’s probably not the right fit.
Comfort level can mean different things to different people. For some investors, certain markets feel too risky. For others, the biggest concern is tenant issues or property damage. I often hear things like “I don’t want to worry about an overflowing toilet in the middle of the night,” or “I don’t want to deal with tenants who will trash my units.” If that sounds familiar, you may be better suited for more passive commercial properties instead of apartments.
Location also matters. Some people want to drive by their investment regularly to keep an eye on it. Others are perfectly comfortable owning something across the country as long as it meets their goals.
Once you understand what you’re comfortable with, you can begin to look at properties that match that criteria.
4. Address the Logistics
When getting started in real estate investing, a lot of people want to dive right into logistics and finding their first property. However, logistics should be the last step in your preparations.
Logistical questions to consider include:
- Will you pay cash or get a loan?
- If you’re financing, which lender will you use, and what will the terms look like?
- Who will manage the property? What will that structure look like?
Once these logistics are in place, you can go into the market with clarity about what you’re buying and why.
For the client I mentioned earlier, this process led us to single family homes. They wanted something predictable, easy to rent, and easy to sell later. They also wanted to be able to drive by and keep tabs on their investments. Based on their objectives and comfort level, a portfolio of single family homes made perfect sense. It gave them the confidence to move into real estate investing even though they hadn’t done it before.
By understanding their goals, comfort level, and logistical needs, we were able to build a strategy that felt manageable for them and aligned with their long-term plans.
Final Thoughts
Getting started in real estate investing doesn’t have to be complicated. With the right team, a clear objective, a realistic understanding of your comfort level, and a firm grasp on the logistics, you can make confident, informed decisions.
Many investors we work with appreciate having a straightforward framework that helps them get moving without feeling overwhelmed. If you’re considering your first real estate investment in Pennsylvania or Maryland, reach out to our team. We’re always happy to help you take the next step with clarity and purpose.
