Real estate has always been a sought-after market for investors. The global financial meltdown in 2008 dampened the property business and real estate insurance options, but now the market is back in full swing with new investors pouring in. Despite the hype, real estate is a nuanced business where only a handful of well-informed practitioners succeed. The investing tricks your grandpa used during his day probably won’t work in today’s contemporary market. However, knowing the basics will certainly help newbies navigate the complexities of property investment. Read ahead for several useful tips for entering the world of real estate investment:
Find Alternative Funds in the Beginning
When you are just starting out, it’s not a smart move to spend your life savings on one property investment. Never, ever tap into your emergency savings fund for investments. Instead, manage your finances with a good local bank or a trustworthy broker. Ask around for local sources of alternative solutions for financing investments. Consider joining real estate investment trusts or a mutual fund. You will get financial as well as technical support within a group of seasoned investors.
Don’t Postpone Good Deals
If you come across a deal that meets pretty much all your criteria, and in every sense is a “good” deal, close it. Do not wait around for a better deal or that “unicorn” deal with magical returns. It is important that you do not jump headfirst into an investment. Then again, you should not set your expectations too high and wait around for the deal of your dreams. Remember, once you pass off a good deal, it won’t come back.
Make Your Calculations Right
Newbie investors often get swindled with overestimated property values. Even if you have crowdfunding help for your real estate investment, you do not want to get taken advantage of. You will have to learn to do a thorough financial analysis of property values to protect yourselves from paying more than you should. Do not submit to the property values that sellers push on you. Do your own research and find out the real value of the property before you make a deal. In this case, government documents are your friends. Look at property maintenance records, property tax returns and tax statements to estimate the real value of the place you are trying to buy.
Find Properties With Declining Prices
You can only make good deals with sellers who really want a property off their hands. How could an investor know this? Browse the property ads. See which properties have been on the market for a while and compare the prices from previous months or years. If the price remains the same for more than six months, then you are less likely to negotiate for a lower price. On the other hand, if the price has come down from an ad from a previous year, this means the current owners really want to sell. You will have a better chance at negotiating for less than the asking price.
Keep in mind that real estate investment is a business. Even with turn key investments, it’s not as safe and effortless as putting your money in a savings account. The harder you work, the better your returns will be.
Image from https://www.levinlaw.com/news/real-estate-investment-trusts-pros-cons-and-dangers