Real estate investing, as we have seen from the previous article can be for anybody with a proper understanding of how the industry works. We have also seen that you do not need a million-dollar portfolio before you can get into marketing. The best advice is: ‘Start small’. It never hurts to be cautious, especially if you are a new entrant into the business.
If you take the time to study, not just the market, but also the experienced players in the market; you are certain to begin to understand how the market works and how best to operate in it. Just remember that no matter the kind of business you decide to invest in; you are also going to need to study that market first and make decisions that may not always work out as you had hoped, especially as a new entrant.
But with adequate guidance, you are bound to do better than just plunging headfirst into the murky waters of the industry.
In this second installment on all you need to know about real estate investing; I present another five points to consider when getting into the real estate business.
6. Team Up with an Experienced Investor
Partnering with other investors who have more experience than you will be extremely beneficial. Developing these connections can assist you in making your first investment decisions, reviewing your projections, and discussing the real-world consequences of your decisions. Consider these connections to be the cornerstones of your community of trust, and cherish them as if they were gold.
7. Follow a Current Investor
Get a mentor and shadow someone currently investing. Find out the methods they use in their work and the characteristics that make them either good or bad at what they do. It is always good to learn from others especially when you are not familiar with the terrain of the new business you are interested in investing in. experience they say is the best teacher, but no one says it has to be your own experience. You can learn from other’s experiences to do as well as they do or to avoid the pitfalls that crashed them. Either way, you learn.
8. Think about Flipping Homes
Very much like you see on HGTV, flipping homes can be worthwhile IF you understand what you're doing. Buying a permanent home at a bargain price, setting it up, and afterward selling it for a profitable price is not as simple or as fast as they make it look on TV, however.
There is more to it to increase your risk level than is usually implied, as you need to precisely anticipate redesign expenses and sell rapidly, to limit the measure of time you are paying for the home. Add to all that the possibility that the home doesn't sell as soon as you had hoped, you have to keep that in mind too.
Still, if you have the DIY abilities to redesign a home or have an accomplice who can, flipping homes may be the right move into land contributing for you.
9. Purchase a Vacation Rental Home
A get-away investment property fills different needs. It gives you someplace to travel yet, in addition, gives you the resources you need to pay for the vacation home. You can buy a summer home or townhouse, live in it for part of the year, and lease it out the remainder of the year.
The profit from the venture differs, here, contingent upon what sort of property it is and where it's found. The disadvantage of putting resources into a get-away property is that it's found away from where you reside, and as such, you may need to engage the services of property managers, which may also eat into your profit margin.
10. Think about Commercial Real Estate
Investment in Commercial real estate investing is more of the forte of experienced real estate investors, but not all the time. This is because it is often more expensive to invest in than residential real estate part, but the great thing about commercial real estate is that it also often generates a higher return on investment.
However, there are a few drawbacks, such as unoccupied spaces that you will still be required to pay for even if a tenant vacates the property and it is not immediately retaken or tenants are late in paying their rent or don’t pay their rent altogether; you will still have the mortgage obligation.
Remember that commercial real estate often has long leases, this means that you will not be able to increase the rent for 5 to 10 years. Although this might guarantee that you have a stable tenant, on the flip side, it would also mean that you cannot review your rental rates to meet market prices regularly as you could with residential property.
Investing in the real estate market as a newcomer doesn’t have to be a frightening experience. What you should do, however, is to ensure that you start small, research the market thoroughly, and evaluate both your short-term and long-term goals in the light of what you are getting into the market with and how far you want to go. It will also be wise to talk to experienced real estate investors and learn as much as you can about investing in real estate and especially about the market that you wish to buy into; and very importantly, don’t rush!
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