Real estate investing has proven to be one of the main ways to build wealth for a long time. Real estate is never a bad investment, as it can be a viable way to build monthly cash flow, help you retire more easily, and help you reach your financial goals.
However, successfully investing in real estate can be difficult in today’s competitive market. Deals are becoming more and more complex, and even one mistake can cost investors a lot of money. So save yourself a lot of time, frustration, and money by reading some of our real estate investing tips (and mistakes to avoid) and getting in touch with one of our agents today!
The Best Real Estate Investing Tips For Those Just Getting Started
In this article, we’ll give you a basic overview of things to consider if you want to start investing in real estate. Then, hopefully, you’ll discover some actionable real estate investing tips to help you know where to look, the types of real estate to buy, and more!
Define Your Real Estate Investment Goals
The first real estate investing tip we have for you is to clarify your individual investment goals. When it comes to making investment decisions, you’ll want to determine a clear strategy to reach those goals. Know where you want to go and how you plan to get there – before you spend all of your hard-earned savings on real estate.
There are so many factors and variables in real estate investing, so it’s essential to do some market research and talk to experts to help you formulate a personal real estate investment strategy. For example, what type of real estate are you planning on investing in? Residential, commercial, land, or particular use?
Plus, there are several strategies you might consider – core, value-add, and opportunistic. While one person might thrive on opportunistic fix-and-flip properties, others find that core buy-and-hold longer-term investments suit them better.
First-time investors should do some research, talk to agents in their market, and pick a strategy they think will work best for them and their personal goals. Stick to your goals and fine-tune your investment strategy along the way.
Order Inspections and Appraisals Before Buying
One of the most important real estate investing tips we give first-time investors is to always always always get an inspection before buying. Home inspections will show you all the “red flags” that might be a part of the property. These issues are good to know early so that you can plan for repairs and renovations and adjust your budget accordingly. In addition, inspections will show you the difference between a sound investment and a high-risk investment.
Additionally, property appraisals are beneficial because they give you an analysis of the past, current, and predicted future value of the investment property. Don’t take a chance on guessing what the property is worth; get a professional opinion! Appraisers will also give you a reasonable estimate of what you can likely charge in monthly rent once you’ve fixed up the property.
Join a local networking group
There are thousands of real estate investing groups across the country. Consider joining a couple and participating in local groups too! Joining groups will help you meet people to help you and introduce you to new topics and processes you might not have been exposed to before.
Joining these groups can provide opportunities for education, mentorship, new deals, and so much more. Plus, many of these groups have local businesses you can support, and who doesn’t want to give back to the community?
Don’t Go Overboard With Renovations
Especially with fix and flip properties, don’t go crazy with renovations. You don’t have to blow your whole budget making your investment property look like it’s out of a home improvement magazine, especially when it comes to accents and fixtures.
You want it to look modern and clean, but you don’t have to go overboard. If you’re selling, the buyers will want to put their own flair on the home, and renters won’t want to pay more monthly just because you went a little overboard with the renovation budget.
Pair Up With Experts
We’ve mentioned it before, but investing in real estate has a lot of moving pieces. So it’s critical that when you first start out, you partner up with experts in each area of the process. Having people who have done what you’re trying to do will help you minimize mistakes.
One thing you should do is align yourself with a real estate agent you trust, as they have access to tools and resources that could be beneficial to you. Plus, many real estate agents are investors themselves, and they can give you more tips and help you avoid mistakes. Don’t reinvent the wheel when others have already paved the way with proven processes that work.
Pros of Real Estate Investing
Now that you’ve got a few real estate investing tips to consider let’s discuss some of the appeal of real estate. First, it’s much less risky than investing in the stock market. Though you might not have the same earning potential, you can pretty much count on making a return when it comes to real estate.
One main pro of investing in real estate is the steady cash flow. When you have enough rental properties and trustworthy tenants, this becomes a stable revenue stream for your business. Owning real estate also comes with tax breaks – you can deduct all sorts of expenses from your taxes. These include mortgage interest, depreciation, property tax, and more.
Lastly, long-term returns are often properties, because over time, most properties increase in value.
Cons of Real Estate Investing
As with every potential investment, there are some risks to consider. For example, potential returns aren’t as high as the stock market, and the time it takes for you to see that return could be a lot longer. Also, unlike stocks, you can’t turn a property into cash quickly, as they aren’t liquid investments.
Additionally, real estate investing can be pretty cash-heavy. Especially if you’re looking to create a steady stream of income, you’ll likely need cash on hand to get started. Whether’s you’ve saved the money or acquired a loan, you’ll need to be able to pay for building improvements, maintenance, and more.
Managing tenants and taking care of maintenance can be a challenge too. Whether you hire a property manager or try to manage it yourself, there can be many unexpected problems that come up. Though it can be really rewarding, it’s important to consider that with rentals come overdue rent, roof leaks, power outages, finding qualified tenants, and more.
Real estate investing is a fantastic opportunity to explore new financial avenues and help you plan for retirement or simply create a new form of income. We hope that a couple of the above real estate investing tips help you feel better about getting started. If you want to learn more about investing in real estate, set up a strategy meeting with us at 41 Realty Group. We’ll discuss your concerns, answer your questions, and help you find the right property for your first investment. Give us a call to get started at (406) 969-4141.