Gaining The Experience You Need To Succeed
Even with capital lined up and a growing base of knowledge, you might still hesitate when it comes to investing in commercial real estate. If you’ve never moved forward on a deal before, it’s natural to worry about making mistakes. Many aspiring investors ask the same question: “How can I gain experience if I’ve never done a deal?”
We’ll look at answering that question in this article, which is the third in a three-part series (see the first and second articles).
Why Experience Can Be a Challenge
Real estate can feel like a chicken-and-egg problem. You need experience to do deals, but you need deals to get experience. This paradox keeps many people stuck on the sidelines, watching others succeed while they wait for the moment they finally feel “ready.”
In reality, the only way to build experience is to get involved. But that doesn’t mean you have to dive into a massive, high-risk project as your first step. There are safe, strategic ways to begin building real-world experience so you can build a track record and carry out more deals.
Start Small and Practical
For many investors, multifamily assets provide a good entry point for real estate investing. This strategy might involve buying a small multifamily building, living in one of the units, and renting out the others. It will give you a hands-on course to property management. You’ll learn how to screen tenants, handle maintenance issues, and balance cash flow. By living in one of the units, you can reduce your own cost of living.
Another path consists of working within a firm. At a smaller company, you might wear multiple hats, underwriting one day and solving property management challenges the next. That variety gives you exposure to the full investment lifecycle. At a larger firm, like a REIT or an institutional investment organization, you might specialize more deeply, gaining expertise in one area and learning from extensive training resources. Both paths provide valuable lessons. You can think about your preferences and goals, and decide which method will work best for your situation.
Take Every Opportunity to Engage
One way to get started quickly is walk your neighborhood and become a local expert. Tour properties in your area, even if you’re not yet a buyer. Carry out underwriting exercises on real listings to practice your analysis. Attend industry events, join a local real estate association, and ask questions whenever you can.
These small actions build momentum. Over time, they add up to a portfolio of experiences that others will notice. When the time comes to pursue your first deal, you’ll already have a foundation of practice and perspective.
The Long Game
Even if your first deal is small, it can be a start. You’ll also find that there will be lessons to learn from each project. As you carry out successful deals, it’s like that more investors will be interested in talking to you. They’ll be more likely to trust someone who has walked properties, solved tenant problems, and found resolutions to complex issues.
Taking the Leap
The most important thing is not to let lack of experience keep you from taking action. Keep in mind that everyone starts somewhere. The investors you admire today were once beginners too. Whether it’s a small multifamily purchase, a role at a real estate firm, or joining an investment group, your first step can be important, as it will pave the way for a long-term track record.