Inspiration can be a double edged sword. On one hand, it gets people motivated, and dreaming of things they never thought possible for themselves. On the other, some tend to dream too big in the beginning and can get very discouraged by the reality of things.
That’s not to say that big dreams aren’t possible, they totally are!
It’s easier though, to start out small, earn your chops, and build your dreams as you grow as an investor.
I field a lot of calls from beginners that have read a couple of books about real estate, and think they can go out and buy a large apartment building. They can, but not right away, at least in most cases. There are always exceptions to every rule, but the vast majority of real estate investors start out small.
You see, lenders don’t want to risk their money. They don’t evaluate deals by the amount of zeal in the investor. They want cold hard numbers. Money, credit worthiness, years in the industry, and collateral. All of these things, and a whole lot more, help the lender mitigate the chances of losing their money on a real estate loan.
It’s far easier to borrow smaller amounts of money, on properties that are easier to market. A single family detached home, especially in today’s market, has a much larger pool of prospective buyers than a large apartment building does. In real estate lending, it ultimately comes down to what happens in a worst case scenario. Is the lender able to recover their investment?
Starting small is just plain easier to get started.
On today's episode of the “Investment Property Income” podcast, we are talking about the different levels of experience in real estate investing, and how to match property types with experience levels.
It’s important to keep in mind though, just because you start out small, doesn't mean you have to stay small.
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