5 Steps to Start Investing in Real Estate

Independent investor and author Kim Kiyosaki bought a single rental home in 1989 and has 2,000 today. Here’s how she did it.

1. Prepare well

Invest in an area you’re familiar with, where you know the market. Also, read about real estate investing so you understand the numbers and know how to perform due diligence on every property. If you use a broker, ask if they also invest. There’s a different mindset between someone just making a commission and someone who understands investing.

2. Start small

Kiyosaki started with one house in Portland, Ore., which she bought for $45,000. She rented it and had $50 at the end of each month. “That was my cash flow,” she says. “Know beforehand if you’re doing it for capital gains or cash flow. I invest for cash flow.” Often rental properties aren’t hit as hard when the market turns, but it is still best to look first for a stable or growing area.

3. Repeat what works

“I just keep buying more and more,” Kiyosaki says. “Now the cash flow pays for the house I live in, my vacation house in Hawaii and all my luxuries.”

4. Trust yourself

“The biggest investing mistake I’ve made was when I didn’t trust myself,” Kiyosaki says. “One investment was bigger than I had done before, and my fear made me look at everything wrong with it. I am risk averse and one of the killers was having negative people around saying, ‘Oh, this is risky.’” Surround yourself with like-minded people and make clear agreements with any partners.

5. Self-management

When you’re starting, manage it yourself. Management fees can make the difference between monthly profit and loss. You’ll also understand the property and learn about it – like how to spend money most effectively to increase the value and manage the expenses.