04 Apr A NEWBIE’S GUIDE TO REAL ESTATE INVESTING
In this article we will cover some tips for real estate investment
Real estate investors should treat their real estate activities as a business in order to be able to establish and achieve short- and long-term goals. A business plan lays out your strategies and course of action and helps in maintaining focus on the goals rather than getting distracted by any minor setbacks. Before you buy your first property, make sure to do an in-depth analysis, deduce what you want from your investments.Determine what your financial goals are, be sure to set realistic milestones for your profits over time frames of a year and then further on. If you are confused about how to plan your finances meet with a financial advisor.
Master the Market
Successful real estate investors study their targeted market(s). Keeping up with current trends, which includes any alterations in consumer spending habits, mortgage rates and the rate of unemployment in that particular area this enables real estate investors to be able to address current conditions and strategies for the future. It also lets investors forecast when trends are likely to change.
The biggest mistake that some new investors make is that they limit their search to areas close to their home. Often better rental areas are located at a distance. Newbies are under the impression that they need to live near their properties in case tenants have any issues. But in reality, if the home is properly repaired before tenants move in, there are hardly any issues. Another important thing is you shouldn’t just go ahead and buy the first property that seems attractive. You must keep in mind that you will not be living there. The key is to choose a property that fulfills your set criteria and is most likely to earn you profit.
Perhaps the most important thing about a property is its location. Location matters a great deal when it comes to real estate. A little real estate secret is the ‘fixing and flipping’ technique, the trick is to buy the worst house in the best neighborhood. The worst house is a term used for properties that need work hence they are fairly cheaper than other properties.You may invest some money on fixing the house and re-sell it for profit.
Check Your Credit Report
A very useful tip for real estate investment is checking your credit report this helps you determine your ability to buy an investment property. Most people need to borrow money to buy real estate. One note: For many quick bridge funding lenders, credit is of minimum importance compared to the deal and exit strategy.
Examining your credit report is a very important step it is crucial that you resolve any issues you have on your credit report whether they are mistakes which can be easily resolved or legitimate problems that you will have to work to improve.
To put it in simple words, banks are more likely to loan you money for your own home than a property that’s not your primary residence.
There are many ways to find a property that you may want to buy. One fairly effective method is using real estate auction sites as they enable buyers to purchase properties in locations outside their immediate area. It is not smart to rely on one particular method to find your desired property as it may take time and hinder your progress.
The “1% Rule”
If you are confused about whether the property is worth the price you’ll pay for it or not use the “1% Rule”.
The 1% Rule is applicable if you plan on a buying a property to rent out to one or more tenants. It states that an income producing property must produce 1% of the price you pay for it every month. For example, if you’re looking at buying a property for $160,000, then the monthly rental income should be 160,000 x 1% = $1,600.
Invest In an Accountant
Taxes are an important part of a real estate investor’s yearly expenses. Understanding current tax laws is complicated and time-consuming. The smart thing to do is to hire a qualified and reputable accountant to handle the business’s books. The cost of hiring the accountant will surely be compromised by the savings a professional will bring to your business.
CONNECT WITH OTHERS
A network can prove to be an important source of support and guidance as much of real estate investing relies on experiential-based learning.Connecting with others from the same field helps create opportunities for a new or experienced real estate investor. Such groups provide an ideal platform for investors to challenge and support each other.
Understand the Risks
Unlike the stock market, real estate investors are not warned about the risks of making a bad deal. It is crucial for a real estate investor to first understand the legal and financial risks involved with property dealing before starting. This tip for real estate investment is very important as you know what you are getting into.