6 Tips for Investing in Real Estate
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Are you looking for an investment opportunity that will yield significant gains over the long-term? If so, investing in real estate may be the path for you. Property management, rentals, fixing and flipping, or just holding onto property are but a few avenues that investors can profit from with their real estate ventures. But, take heed, it’s not simple or easy work. It requires business savvy, dedication, and a comprehensive investment strategy.
Do you want to thrive in real estate? Follow these 6 tips and you’ll be set.
Create a Strategy for Investing in Real Estate
Coaches don’t tell their team to just go out there, play hard, and have fun. Such a cavalier approach is a recipe for disaster. The same goes for real estate investing. If you go in thinking you can just wing it, you’ll lose money. Lots of it.
It’s critical that you create a business plan that establishes measurable and achievable goals in both the short- and long-term. With just about any investment there will inevitably be hitches or issues. A plan can keep you grounded and on task, regardless of whatever curveball gets thrown your way. You should be able to thoroughly answer questions such as:
- Do you want to rent? Fix and flip? Invest for the long haul?
- What are your retirement plans?
- What are your income streams; currently and in retirement?
- What is your ideal price range?
- Have you planned your estate?
Get to Know the Market
It’s essential that you have an exhaustive understanding of the targeted real estate market. You should know:
- Comparable properties
- Pricing trends
- Consumer spending habits
- Unemployment rate
- Mortgage rates
A solid grasp of the market helps you tell a great deal from a stinker. It gives you an idea of geographies or types of real estate that are most prime for investment.
Discuss How You’ll Pay for It
Have you taken a thorough account of your finances? It should be obvious, but you need to know how you’ll pay for this. Do you have the proper savings to cover a hefty down payment or the costs involved with fixing up a property? Are most of your assets illiquid?
If you don’t have a current income stream and most of your net worth is already tied up, consider obtaining a no income asset-based mortgage. You can qualify for a loan that is up to $3,000,000 so long as you:
- Have a credit score of at least 600
- No employment or income
- Have verifiable assets
Find Your Niche
If you’re new to this world, your long-term success heavily depends on your ability to learn on your feet and take off running. The world of real estate is massive. There are several different avenues you could pursue.
Do you know what you want your focus to be? It helps to find a niche and settle on that. This allows you to accrue experience and knowledge, and build up relationships with figures within that market. Specializing makes this a far simpler task. Once you find success, you can then move on to other investment areas of interest.
Acknowledge the Risks
Have you prepared yourself for the possibility that you could lose everything? Any time you invest your money in something it’s important that you are not only aware of this fact, but prepared for this. Nothing’s guaranteed, especially in the world of real estate.
You should have enough savings to be able to weather a storm. Sinking all of your retirement assets on a risky venture is not only inadvisable, but foolish. The last thing you want is to get out of debt and then fall back into it. Therefore, it’s critical that you account for risk and do everything in your power to mitigate it.
Do you already have years of experience within this market? If so, great. Even then, you’ll likely need help. Enlisting the aid of professionals might cost you upfront but save you money over the long haul. Professionals worth considering include:
- Accountant – Knowing current tax and real estate laws and understanding how to navigate them could make or break a budding real estate investment opportunity.
- Lawyer – There will be pages upon pages of documentation and legal matters you’ll have to negotiate and approve throughout the entire process. Having a trained legal mind on your side protects you from liability or getting ripped off.
- Real Estate Agent – Your real estate agent acts as your scout and best friend in the real estate world. They can help you find, buy, or sell properties and have already established a foothold in the market you’re targeting.
- Contractor – If you plan on flipping and fixing, you’ll need someone to help guide you through the process, especially if you don’t plan on doing the work yourself.
Start Investing in Real Estate
Investing in real estate is an exciting money-making opportunity, but there are no guarantees. If you want to succeed, you need to treat the process with the respect it deserves. Alleviate risk by doing your homework, getting to know your market, and surrounding yourself with a team of experienced people who can help you get ahead.
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