TIPS FOR FIRST TIME BUYERS
If you are a first time investor in the real estate field, then you’ve certainly chosen a potentially great way to make extra money. Your monthly rental income can produce healthy personal cash flow and your property could appreciate in value over time. However, no investing strategy is as easy as it sounds, and if you’re just getting into the real estate game there may be a bit of a learning curve. Here are some property-savvy strategies to get you started.
DON’T START BIG
There’s no need to start out by buying a 50-apartment complex or expanded real estate investment. Your best bet is to start small. Get yourself a single condo or house, which allows you to get your feet wet and explore what it’s like to be a landlord. You may find that you love it, and end up making more real estate purchases over the years. On the other hand, if you decide it’s not for you, it’s much better to find out after a single, small investment.
LEARN ABOUT DIFFERENT REAL ESTATE INVESTMENTS
Real estate investing does not fall under one umbrella. You can invest in residential, commercial, or industrial property, and there are also real estate investment trusts (REITS), and other types of investments to consider. Take a look at them all to understand which the right fit for your goals is.
As you do this research, also think about the specific type of real estate you want to get into. You can buy a distressed property, fix it up, and then sell it at a profit. You could also buy a property to rent that may need very little fixing up, or purchase a place that’s rent-ready. The decision is yours, and the options are endless.
KEEP YOUR EMOTIONS IN CHECK
Investing in real estate can be an emotional thing. In many cases, you either love a property or you don’t, but from an objective standpoint, you should review it for its resale potential. It doesn’t matter if you love the floor plan or amenities, it all depends upon how much you can get for the property when the time comes to sell.
REVIEW YOUR CREDIT SCORE NOW
Oftentimes your ability to access financing in order to invest in real estate depends upon your credit score. If your score is low, work immediately on bringing it up by paying your monthly bills on time, lowering your credit card balances, and not opening up too many new lines of credit before you’re ready to sign on the dotted line.
INVESTIGATE BANKS, REALTORS, AND MORTGAGE BROKERS
Since you’re more than likely financing some of your own investments, start investigating banks. Although you should definitely look to your current institution, you may find better rates with the competition.
You also need to find properties and get mortgages, so look for a realtor and a mortgage broker. No two professionals are alike in these industries – just do your research before choosing one. Run the numbers with banks, and look for previous experience and customer service with realtors and mortgage brokers.
HAVE AN EXIT STRATEGY
As with any other investment, the real estate market can go south virtually anytime. Even though things seem strong at the moment, we could face a downturn similar to what took place in 2008 and 2009. Acknowledge that the time may come when you need to cut your losses, and be ready to make a sale whenever the need arises.
REACH OUT TO INVESTORS IN YOUR AREA
As a beginner, you should research online whenever possible and also reach out to local real estate investors who can give you more personalized advice and tips. Pick their brains for any questions you might have, along with other pointers they can provide.
Investing in real estate requires forethought, research, and discipline. It is not for the faint of heart. Plenty of folks lost a bundle of money when the housing market collapsed during our most recent economic crisis, but that’s not to say that you should be dissuaded from it. If you have the wherewithal to put in the required work, it is possible to make a lot of money. Just make sure you know what you’re getting into before you take the leap.