Real Estate Investing 101
Investments are a great way to build wealth and foster financial freedom. When it comes to where you can put your money, you have numerous avenues available to you. Investing in residential real estate is an attractive option for many, but it is much more involved than simply buying a piece of property and collecting a rent check every month. While I cannot possibly cover everything here, the information that follows will hopefully give you a solid start in educating yourself about this endeavor.
Focus on What You Know
Chances are, if you are thinking about investing in real estate, you know a little something about this world; maybe you have experience managing an apartment complex or you performed contractor work on fixer-uppers. If you have experience in a particular type of property, it is probably a good idea to focus your investments there. Your knowledge will put you ahead of the curve and you will benefit for your expertise in numerous ways.
Pick the Right Real Estate Agent
No matter what type of properties you are looking for, you will likely benefit from the experience of a seasoned real estate agent. You should pick someone who has also invested in the area. They can offer valuable advice on establishing rents, ideal properties and good locations. To vet them, ask for contact information of other investors they have helped. Make sure anyone you pick has a team of professionals they can refer you to, such as property managers, accountants, attorneys, inspectors, mortgage brokers and insurance advisers.
Start Close to Home
The more familiar you are with an area, the easier it will be to assess important factors related to whether or not your investments will prove profitable. When starting out, it is probably a good idea to invest in properties that are close to where you are currently living and by close, an area that you are in frequently and are very familiar with, not somewhere that is just close but you never actually spend time in. Familiarity with the area of your investment properties can help you keep a close eye on market trends, whether the area is growing or declining and the like. This will help you make better decisions, such as knowing whether or not that new property on the market is a steal that you should grab right away or pass on.
Cheap Does Not Always Mean Profitable
It is natural to want to spend as little as possible and make as make as much profit as possible when it comes to any financial endeavor, but this mode of thinking can get you into trouble, especially when it comes to investment properties. While you want to get a good deal, do not operate with the mindset that the cheaper you get a property for, the more profit you will make. This may not be the case; if you buy a bad property for whatever reason, it may end up costing you dearly if you cannot rent it out or you need to spend tons of money fixing serious problems. You need to carefully crunch numbers and take a variety of factors into account when deciding on the best properties and while cost is of course an important consideration, it is far from being the only one.
Kelli Cooper is a freelance writer who has covered a range of real estate topics from investment tips to how to find your dream home. If you are thinking about getting into the investment property game, a real estate investing course may be something to consider
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