Real estate is generally considered one of the most stable and tangible assets. If done properly, real estate investing could be the most effective and reliable source of income. Sophisticated investors diversify their portfolios with cash-flowing real estate to benefit from rental income, tax advantages, leverage, and appreciation.

Although this is common knowledge, very few get into real estate, and not everyone becomes successful from those who take the step. There are numerous reasons for this; however, much of it boils down to a lack of education on the secrets and hacks within this niche.

If you're planning for financial independence by earning residual income from rental properties, you should begin by learning the basics of real estate investing for beginners. In this article, we'll cover exactly that. So keep reading.

Before You Invest, You Shall Leverage The Resources Available For You

To become a successful real estate investor, you need to harness the power of leverage. I am not talking here about only leveraging OPM (Other People's Money), but equally importantly, OPK (Other People's Knowledge), OPT (Other People's Time), and OPC (Other People's Connections). Most of the time, people who rush into buying an investment property before doing these things make costly mistakes that sabotage their real estate careers.

We will go through leveraging OPM later in this article; let's start with the most important form of leverage, OPK.

Educate Yourself… Leverage OPK

If you are wondering how to get started in real estate, real estate education is the key to doing it right. Give yourself a reasonable amount of time to learn the basics of real estate investing before you get started. Various sources of information like articles, books, podcasts, online courses, masterclasses, seminars, and YouTube videos are available. Better still, consider having a mentor. It's probably the fastest and best way to expand your knowledge and avoid the common mistakes made by beginner real estate investors.

Once you have educated yourself on the basics, commit yourself to taking action. Don't just keep learning endlessly without taking any concrete action.

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Assemble a Team... Leverage OPT and OPC

You may not realize it, but real estate investing can be challenging if you are not a team player. There are so many steps that are crucial to every real estate transaction. Successful investors understand that it's impossible to do everything on their own. That's why they always have a team of professionals to help them with the different aspects of their real estate transactions.

Irrespective of your experience level (highly experienced to no experience), you will maximize your return on investment potential by having a competent team around you. For a start, your real estate team may include a real estate agent and mortgage brokers. As your portfolio grows, you may need to bring on board more real estate professionals, such as a home inspector, accountant, real estate attorney, property manager, etc.

You will be outsourcing the services of your team members, each for their expertise, and compensate them for successful transactions. This type of leveraging other people's time (OPT) and other people's connections (OPC) will enable you to increase your success and compensate for your lack of experience. Just make sure that you are working with competent and trustworthy people.

Get The Capital You Need To Fund Your Investments... Leverage OPM

As a starting investor, you don't need too much spare cash. Your job allows you to borrow what you need to start investing in real estate. If you grasp this concept, you will agree that being an employee is an advantage.

Lenders like to lend to people with a regular income, a good track record of paying their debt obligations, and a sensible plan for investing what they're borrowing. Banks like secure investments. The property is a secure investment, which can be put as collateral to secure the underlying loan.

With this principle, you can borrow from 80% up to 90% (and even 100%) of the property's price. This means you put a little cash from your pocket (bank account) and leverage the bank's money to invest in a property that will pay you passive income from the rent. How powerful is that!

Related: Decoding The Process of Financing Your Real Estate Investment

Have a Plan and Stick To a Process

After educating yourself about the basics of real estate investing, you must surround yourself with a competent team and then secure a loan pre-approval from your lender. What happens next?

Related: Why Is It Important To Get Pre-Qualified For A Loan Before Prospecting For Rental Properties?

At this stage, you need to come up with a game plan. As a real estate investor, you are planning to fail if you fail to plan. Having a plan is the best way to ensure you keep on track and are prepared to mitigate any hiccup along the process.

Having a plan means establishing your investment goals (long-term and short-term), assessing different real estate investment strategies, and then following a proven process to successfully invest in properties that would best help you achieve your goals.

Related: How and Why to Invest in Real Estate: The Basics

Find Profitable Cashflowing Properties

To find an investment property with a good rate of return, you first need to select the right real estate type and location. Since location significantly impacts a rental property's return on investment, it's crucial that you perform a thorough real estate market analysis even before you begin your property search.

Related: What Does "Location Location Location" Really Mean in Rental Properties Investing?

A positive cash flow property is generally the type of real estate wealth builders invest in and add to their growing portfolios. A rental property gives you access to a monthly income stream and lowers your real estate investing risk.

The Bottom Line

Investing in rental property could be the way to go if you have been looking for a dependable and less risky way to generate passive income and build wealth. However, it's important that you first learn about this niche before you get started.