Among the biggest decisions in your lifetime is investing in real estate property. With real estate, you know your money is secured because it is linked to a tangible asset that grows in value through the years. However, wrong investment choices or bad timing in investing in a property can lead to unlikely results. Every investment will have to be well thought and done right. This is even especially true for real estate properties.
In this post, we have compiled 15 investment advice that may guide and help you create the best choices when buying or investing in a real estate property.
15 Investment Advice for the Rookie Realtor
1. Do your research
Gain some knowledge in the real estate industry. You don’t really have to go back to school to achieve this. Read books, do your research to understand the common language being used in the real estate industry. You’d like to get away from sources that promise get-rich-quick programs but you’d like to invest your time reading about real tangible investments with value. Attending seminars and short courses about real estate can also help you get started on the right track.
2. Consider your budget
Before making an investment, you will want to ask some important questions – How much budget do you have? Do you have enough savings for a downpayment? What are the requirements needed to become eligible for an investment?
Investment requires money and therefore you will need to look into your financial position so that you know how far you can invest.
3. Socialize with real estate industry experts
Speak to someone who has great knowledge about investing in real estate. Industry experts could be anyone from a successful real estate agency or a landlord who have years of experience in property investment. Surround yourself with people you want to learn from.
4. Abide by the rules imposed by the State law
It’s a must to understand local real estate laws to make sure that you are abiding by the rules and regulations imposed by the law. You can start by talking to real estate experts to know what is expected from a specific area of investment.
5. The Internet is also a good resource for information
Information is abundant today on the web and you may probably get the details most appropriate to suit your needs using a little research. One more way to broaden your knowledge is to talk to people about the investment property you are interested in. You can watch Youtube videos of real estate experts in your area, listen to podcasts, read books or read blogs and real estate news on a regular basis. This way you will get enough knowledge of how the market works in that area. The more information you gather, the better it is for you to make investment choices.
6. Scouting for the right neighborhood
Location among the most essential considerations to take into account. If in-state real estate properties do not meet your goals, it nice to look at out-of-state options too. Invest in geographical areas where the demand for rental property is high like real estate properties near a university belt. However, note that there could be difficulty in monitoring rental conditions if this will be the case (considering that u-belt property is out-of-state).
7. Look for properties that are on wholesale
Look for cheap deals that are priced below the true market value. You can do this by buying a house at a great deal and them renovate the house to make it twice worth the selling price. Find a property that is undervalued then revamp it. This technique can outweigh the cost of renovations done. However, you will need a professional inspector to make assessments on the condition of the property in order to make estimations of the expenses that you may incur. Be wary of a property that may ask for more expenses on repair and renovations. House-flipping is a lucrative real estate business if done correctly.
8. Understand you tax benefits and deductions
When you have a rental property, it is a business. So be sure to be familiar with the tax benefits as well as the deductions associated with real estate investment. There are lots of tax advantages linked to real estate investments that will provide you with another motivation to buy your very first rental property. Also, you will surely incur expenses that you can deduct. Common tax deductions are not limited to the following – mortgage and travel expenses, repairs, depreciation, and insurance.
9. Improve your credit score
Your credit score is very important. You will want to have a good credit score for you to get any mortgage loan at good terms and interest rates. Most investors today borrow money to invest in real estate properties. So keep your credit score in good standing. Work hard on improving it because it will reward you in all your future investments.
10. Follow the 1% golden rule in investing
In every investment, you will always want to keep in mind the 1% rule. This means that with every rental property you own, it must make at least 1% of the total amount you pay for it on a monthly basis. For instance, if your property is at $300,000 worth, you will want to make a monthly rental income of $3,000 a month. Ensure that your choice of rental property worth its value in the long run.
11. Stay informed
It is very important to be updated on the economic trends of the real estate industry. This will help you when it is time for you to buy or sell based on the conditions of the market. Get to know important real estate ideas and be informed about what’s the latest in the country’s housing market. A well-informed investor makes wise decisions that bring back great financial returns in the future.
12. Don’t count on a verbal agreement until you signed a contract
When investing, it is always proper to count on black and white deals. Agreements that had been closed only via verbal agreement is not a solid agreement. So get it solidified by putting everything into writing.
13. Employ the ideal real estate agent to work with you
There are many real estate agents but only one could be the right fit to work with your needs. Look for the right one through recommendations from close family and friends. Choose a real estate agent with an excellent track record and one who can listen to your needs.
14. Build a Plan
Investing in real estate will require you to have a plan to guide you towards your goal. Your plan doesn’t have to be detailed. You will just need the basic guidelines. Your plan should include how much is your budget, your type of investment, your minimum ROI, and your short and long-term goals.
15. Consider a few important computations
Planning needs to contain precise and reasonable figures to base your estimates and your goals. A few essential factors to consider in your plan is the return on investment (ROI), cash flow, cap rate, rental income, rent change, and taxes. These variables are essential to make the right financial commitment.
Start sure when looking into starting a career in real estate investing. There are many ways that can lead you to the road to success and a lot of considerations that can make or break your investment. The bottomline is equipping yourself with the knowledge and a group of experts that can help you in your investment venture.