The combination of low home prices, rock-bottom interest rates and an abundant supply of undervalued homes has made this one of the best times in recent history to invest in real estate. If you have good credit rating, have money in the bank and if you can obtain financing, real estate can be a lucrative investment.
Investing in real estate is complicated and if you are a first time investor, it can get slippery and treacherous. It is best to learn the ropes before jumping in. You don’t need to go to school or pay a fortune to attend seminars peddled by late night infomercials to learn the tricks of the trade. Bankrate.com offers these tips for people who want to get into the real estate investment business.
There are many types of real estate investors and you must first determine where you fit in. Some people buy because they want to diversify their investment portfolio by purchasing real estate. There are people who want to become landlords and take care of their property on their own because they are passionate about it. Some may be interested in buying fixer-uppers and reselling them for a profit after doing some repairs. There are many who want to buy a home and let a professional property manager handle the tenant, upkeep and management. It is best to start within your comfort zone till you become familiar with the concepts.
The next thing you ought to do is check your financial situation. It may be a good idea to pull your credit scores and talk to a financial advisor to check your financial health to determine availability and access to capital. A real estate investment requires a substantial amount of cash reserves for down payment, property management fees, to pay mortgage when you don’t have a tenant, and for unexpected breakdowns or repairs.
Location is everything in real estate. You must consider buying in areas where the schooling system is good if you are considering buying a home that suits families with school-going children. If you are buying the property to target younger tenants, you must consider the quality of shopping centers, public transport, access to work, and entertainment options. You must focus on the location as if you are buying a home for you to live in, with one key difference. Unlike the home you live in, you must not have any emotional attachments to your investment property.
You must find and build rapport with an experienced real estate agent who knows the area in which you want to buy. The agent’s knowledge of the local investment climate and the ability to find ideal target properties for your purchase are very crucial in getting the best return on your investment. A long term relationship with an agent can also help you in selling the property in future or finding additional investment opportunities.
You buy a property for a great deal and now what? You would need to find the right tenant and you would also need to figure out who you would hire if things break down. Instead of waiting to do all this after you purchase the house, it is best to find and build a support team comprising a property manager, plumber, electrician, landscaper, and attorney to manage various aspects of a rental property.
The process of investing in real estate may seem complicated, but it is not difficult if you plan ahead, have clear goals, learn the procedures, paperwork and other nuances involved.
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