Never mind the occasional rise and fall, globally, real estate still remains one of the safest investment vehicles you can put your money in. Compared to investing in stocks and other financial securities, real estate continues to endure the test of time due to the following reasons:
- Real assets rarely lose their value, in the rare event that they do, they always rebound quickly.
- As the owner, you physically hold the assets.
- Real estate is solid and immovable. Look at it this way, you know how you could wake up one day and your car is no longer in the driveway? Well, your property can’t disappear or get stolen like that.
- The market is relatively predictable as things don’t just change overnight.
- It remains one of the best forms of collateral if you’re seeking a commercial loan.
- It’s easy to insure your real estate assets by purchasing homeowners insurance.
- It’s a good investment vehicle for people with a long-term investment goal and a significant amount of funds to invest.
5 Tip for Successful Real Estate Investment – #3 IS Crucial!
If you’re just starting out in real estate investing, you’ll see that there are quite a number of factors you need to be mindful of in order to succeed. There are many different ways to invest in real estate each with its own intricacies. But we’ll start with the fundamentals. To that end, here’s our selection of 5 basic tips for investing in real estate.
1. Purchasing Units For Rental
This is one of the oldest and most recognized forms of real estate investment. You purchase a property, renovate it, if need be, and put it up for rental. It’s a very desirable source of steady monthly income. As a property owner, you will have to be involved in the running and maintenance of the premises or you can outsource the maintenance if you so choose. There are costs associated with routine maintenance, repairs, etc. but in all, it could be a good way to supplement or even replace your primary source of income depending on how valuable the asset is.
2. Purchasing Units For Sale
This is another old investment type but with more risks involved. You buy a property, modify or renovate it then sell it usually within a short time frame. This is commonly known as “house flipping” and you have to get your strategy right.
Though the financial results can be great, for reasons beyond your control you may find you’re unable to sell as quickly as you wanted to or to sell for a profitable figure. A good scenario for profit would be finding a rundown property in an expensive neighborhood and fixing it up. But remember to do your homework.
3. Location Does Matters
It’s always been location, location, location! A “bad” location may sink your investment dreams prematurely. Before you make any kind of payment make sure the location is good. The right location will yield excellent returns for you. Decide the kind of property you wish to invest in and exactly how it will generate profit for you. If, for instance, you are looking to flip houses, a good rule of thumb for quick profit here is “Best Street, Worst house.” Meaning great/expensive location but the house needs some work. This kind of investment decision beforehand will help you narrow down your search to the location/property that would make your investment goals a reality. You can thereafter decide if to source for funds through conventional or hard money lenders.
4. Study The Market
It could cost you dearly to just rush into real estate investing. The fundamental rule of good real estate investment is to know as much as possible about the local market you’re getting into and the forces controlling it. Take time to find the right property for your goals. You’ll be in a better position to make an informed decision and decide if that’s the right time to invest or to wait a while.
Don’t shy away from expert advice if you can afford it.
5. Research, Research, Research
You’re investing a lot of money so do your research. Check out the general area and the property itself. Have a professional carry out an audit of the property to confirm the general condition of the building. The audit can be as detailed as you want but should include a structural audit (roof, foundation) if you intend holding the property for long or you plan to make major changes to the structure.
Making the decision to invest in real estate is a good one just make sure you don’t rush into it. Find a form of investment that suits your personality. For a potential landlord, the steady income is good but can you stand the hassle of operating costs and dealing with tenants? If you want to flip houses can you withstand the tension that sometimes comes with it?
Understanding your personality will help you choose the option that’s best for you.