There isn’t a better way to secure your future than through smart investing. Investing has become the go-to source for extra revenue for millions of people. And one of the best types of investments is in real estate. The great thing about real estate investment is that it isn’t as volatile as some other types. If you’re thinking of investing in real estate, then consider these 5 tips and tricks carefully picked for beginners.
Know What You’re Getting Into
First things first, investing in real estate isn’t as cheap as chucking $100 in stocks. By all logic, this is one of the most expensive forms of investment out there. What people like to do is invest hundreds of thousands of dollars in buying property. They then rent the property to tenants or businesses. With this, you’re getting a steady monthly income. But it isn’t as simple as that.
To buy any sort of property, you need money. If you don’t have money, then you’ll need to take out a loan. To do that, your credit has to be in check and have the financial capabilities to undertake such a costly transaction. But these aren’t the only things you need to worry about.
You might feel taking out a $250,000 loan to buy a house is enough. What you’re forgetting is that most homes need to be refurnished when looking to rent them. Not only that, but you have to pay the expensive homeowner insurance, inspections, and plenty of other expenses.
Doing your research before investing in this type of real estate investment is a smart first step to take.
Know What Other Options Are Out There
Real estate investment doesn’t have to mean buying property and renting it. You could also invest in REITs. REITs are investment companies that allow you to invest with them. You essential give them money and they pay out dividends. However, even this form of investment isn’t perfect. The returns from REITs are taxable, meaning you will have to factor in the income tax on every profit you make.
Another form of investment is house flipping. This is a funny way to say “buying property, repairing it, and selling it for profit.” If you are quite the handyman and know your way around power tools, then flipping houses is a great form of real estate investment. But, again, you need to have money to purchase the properties and repair them before selling them for profit.
Location Is Key
Regardless of what sort of property you decide to invest or purchase, the number one rule in real estate investing is that location is key. According to this post from the Washington Post, location is that important when searching for a new house. So housebuyers are looking at this as one of the most important factors. Naturally, the more suitable location you identify with a potential property, the more expensive it will be.
The price of properties depends on the location. So even if the property will be more expensive to purchase, you can ask for a higher rent or flip the house for a bigger price. What this means is that a more suitable location will make it easier to do business, meaning the sooner your investment will pay off.
All kinds of real estate negotiation strategies exist when looking to get a better deal. And negotiating is key when looking to do business in the real estate industry. This is even more important when looking to invest your money in this industry. The better deal you get, the more money you’ll save. You can then invest that money into other areas such as refurbishing the property, making repairs, and more.
You Determine the Terms
So you’ve finally made your first real estate investment. Congratulations! It’s now time to decide a few things. When you invest in property, they make up your portfolio. Much like in stocks or other forms of investment, looking after the portfolio is important. This is where a property manager can help you with.
Every property you’ll own will need to be taken care of. From regular maintenance to calculating rent and even allocating a yearly budget, there needs to be someone to do that. While you could very easily manage a few properties, the overload can present an issue for you. With all that said, a property manager will help you determine the term in which you’ll do business with your newly acquired properties.