Real estate is a great vehicle to place your investment dollars in. The market has been rising and is expected to continue to rise over the next year. The quicker you get started with real estate investments, the faster you can be seeing a return on your investment.
If you have been interested in investing in real estate, but have felt overwhelmed by how to get started check out these tips on where to start in real estate investments:
Consider Your Finances
There are a couple routes that most investors take. Some obtain a mortgage for their rental, while paying at least 20% down when purchasing. Others wait until they are able to pay cash for the property to avoid working through the banks and losing cash flow to interest. If you go the second route, it can help you if look for foreclosed properties that you can purchase far below the market value.
If you go the route of obtaining mortgage for your property you can save money on interest by living in your home while you repair it. Banks charge less interest on properties that are owner-occupied. Find out the restrictions and rules to obtain the better rate. Many times you only need to live in the property for a short time to take advantage of the rate.
Some people go the route of purchasing one property at a time and not obtaining an additional rental until they have paid off the first. However, if you obtain lower monthly payments through 30-year fixed mortgages you can keep your expenses low and open up cash flow to purchase additional properties. If you are making good investments the more you make the faster your wealth will grow.
Do the Math
Many popular television shows have made it look easy to flip houses. The shows portray investors purchasing run down properties, doing what looks like simple remodels and selling them for a huge profit. However, this does not work for everyone; if you are inexperienced in remodeling this will not be your best investment.
Holding onto investment properties for longer periods of time generally provides higher returns than working for a quick sale. It is important to find an investment that you can get for the right price and to know how much you can successfully charge for rent. Your goal is to try to keep the price where you attract a good number of tenants, while still providing you with a decent cash flow.
Consider Alternative Types of Investments
Becoming a landlord is not your only option for making money on rental properties. If you are interested in investing, but don’t want to take on the full risk that comes with it, consider a private or public partnership. There are also many real estate investment trusts (REITs) that allow you to invest money without having to do any of the work. On the downside you have no control over the investment, while the plus side is you do not have to spend any of your time managing the property and you do not stand to lost any money other than your initial investment.
If you are looking to invest with a publicly traded company, do your due diligence and look into the company’s history. Not all companies are going to be smart investments of your finances.
Wise real estate investments come from doing your research and staying informed. Rarely does an investor just fall into the right property. Take the time to consider your options and then take action to start investing.