At the moment, house prices are low and interest rates are low too. Hence, now is the time to start to invest in properties if you can. Take a look at the following five tips to help you find that fantastic real estate investing opportunity.
Always Choose a Rental Property
Investing in rental property is a great idea. Home prices are low and the interest rates are fantastic. Hence, now is the time to become a real-estate investor. Also, there are strong signs of recovery on the market as well. Yes, the value of houses is still dropping, but these prices are dropping much slower. For instance, in 2009, prices dropped by a total of $489 billion, a huge amount but only a drop in the ocean compared to 2008, when prices dropped by $3.6 trillion. It has been a long time since prices were this low and since borrowing was so cheap. Hence, the time for investing is now.
Tip 1 – Understand your Options
Different properties have different pros and cons. Hence, what sort of strategy best fits you is the first question you have to answer. You could become a landlord, or you could restore and sell properties. Perhaps you want to buy apartments or commercial real estate, or may you want residential properties, or even land development. It is all about understanding your strategies.
Tip 2 – Partner with Someone with Experience
If this is your first time investing in property, make sure you work with a respectable realtor who has proven experience in property deals. They can help you find the best properties and will continue to do business with you even after you have chosen your property. They can teach you about investment and property management alike.
You don’t have to work with other investors if you don’t want to, but having conversations with them is always useful. They can warn you about common pitfalls and challenges that they face. Take the time to find out what sort of landlords and investors operate in your area and have meetings with them to learn from their trade.
Tip 3 – Location, Location, Location
If you want to purchase a property and rent it out afterwards, you have to consider the location. The best homes are those in densely populated areas, or in those areas that have high rents. Do not look at rural properties with low populations, as it will be very hard to find a renter. Try to find homes with more than one bedroom and preferably more than one bathroom. Check on the crime rate in the area as well, as this is something that renters look into and base quite a bit of their choice on. Tenants like to live somewhere safe, so low crime rates are fantastic selling points. Other attractive points include being near a mall, public transport networks and other amenities such as schools and sports facilities. Remember, the more that is around the property that people can use, the more desirable it will be.
Tip 4 – Have the Money Ready
Before you start looking, start to speak to a financial planner or a potential lender. You have to make sure you have the assets available to deal with the ups and downs that investors have to deal with. You are likely to want to rent the property out, but that doesn’t mean your property will never be vacant. Try to save up at least six mortgage payments, so that you have that safety net available. You also need the money available to deal with any repairs that the property may need every once in a while.
Tip 5 – Have a Support Cast
You have to be ready at all times for any eventuality. Don’t wait for your property to break before you start to look for a builder. Have a network of maintenance people on file for any challenge that can happen, so that you always have the right people at your beck and call. Build a relationship with a lawyer as well, just in case you have legal issues with your tenants. You also need an accountant to deal with all the financial aspects, including taxes.
Remember that a real estate investing opportunity is very different from buying a home for yourself. There are certain risks involved that you have to be able to deal with. It is also very different in terms of finding the property, as you don’t need to build an emotional bond with your property.