Investing in real estate has been long considered an intelligent investing decision. That’s even truer today, with new home listings having risen 13.5% recently. When real estate usually goes up over time, buying as much as possible makes sense.
There are many real estate investing tips to learn if you want to get started buying property. Keep reading to learn six tips that will help you purchase your first real estate investment.
1. Search in the Right Neighborhoods
It’s hard to see success when purchasing a property nobody wants to live in. Unfortunately, that sometimes happens when you buy in the wrong area.
There may be times when you see a deal that seems too good to be true. You see a cheap house with minimal fixes needed selling below market value.
Before you buy that home, check out the neighborhood. Is it in an up-and-coming or established area that’s low in crime? If not, it may be hard to find tenants or find a buyer for your home.
Limit your search to areas you know there’s demand for homes. This will help you move homes more quickly and move on to your next investment.
2. Decide on Your Strategy
Starting without a clear strategy in real estate can seriously impact your success. If you don’t know what you’re doing with a home after purchasing it, you’ll sit on your hands for too long while letting money slip away.
Consider the following types of real estate investing before getting started.
Flipping is one of the most straightforward methods of investing in real estate. Your goal is to find undervalued properties, improve them, and sell them for a profit.
You’ll need to get good at finding potential issues before buying and determining how much you can sell in the future. However, you can quickly turn properties around when you get good at finding these deals.
Rental properties are another popular type of real estate investing. You’ll buy undervalued properties and improve them for future use, like flipping. However, you’ll hold on to these properties instead of selling them.
Your goal is to get rental income and use that money to pay the mortgage. The rent you charge will be more than your mortgage, which means you’ll make a profit every month.
Of course, you’ll need to put work into managing tenant issues. However, companies like reedyandcompany.com are available that can take on the management work.
REIT investing is excellent for real estate investors who don’t have the time to look for and manage properties. Instead of buying property yourself, you send your money to a fund that does the work for you.
In return for your investment, you’ll get a dividend from the company. Whenever the fund makes a profit on its investment properties, you’ll get a dividend payment based on your investment amount.
3. Consider Financing
Do you have the cash in the bank to cover a home purchase without getting a mortgage? While starting real estate investing without debt may seem appealing, it isn’t always the best choice.
If you’re sitting on a house without a mortgage, all your free cash is tied up in that house. That’s money you don’t have available for other investment opportunities.
For most people, it’s wiser to get a mortgage with a lower interest rate. You’ll still make plenty of money on your investment property and have enough free cash to put a down payment on another property.
By spreading your investments across several properties, you’re hedging your risk and expanding your net worth more quickly.
4. Get Help From Realtors
There’s a lot of opportunity in the real estate market that you won’t see without access to recent listings. Public listing websites don’t usually show homes that hit the market immediately. You’ll need access to the MLS to get that information.
Real estate agents have access to that information. They can perform a search and see the moment a home gets put up for sale.
Luckily, most realtors are more than willing to work with investors. Give a relator your buying criteria, and they’ll keep an eye out for homes that work for you.
5. Network With Other Investors
You don’t have to take part in the real estate industry on your own. Many real estate investors know each other and regularly speak about investing. It pays to get in touch with other people in your industry.
One great place to find other investors is meetups. These meetups will have investors in your area and allow you to talk with people doing the same thing as you.
Use your time talking with other investors to exchange information and learn a few tips that will help you succeed in your area.
6. Build a Reliable Team
You probably want to invest in real estate to grow your net worth and get cash flow, but you probably don’t want to spend a ton of time doing the work. Unfortunately, you’ll spend many hours on your real estate journey if you do everything yourself.
That’s where building a team helps. You can hire contractors, accountants, real estate agents, and countless other people to help.
Of course, don’t just hire the first people you find. Run tests with different contractors to see which ones provide the best service.
Keep Learning Real Estate Investing Tips
Real estate investing for beginners isn’t always easy. There is a ton of information to digest, so it isn’t always easy to track down reputable sources.
However, the real estate investing tips above are a great place to start. Keep them in mind and learn more tips when you buy property in the future.
Head back to the blog to learn more tips that will help you wisely invest your cash.