5 Brilliant Tips for Real Estate Investing Newbies
Real estate investing can be a very rewarding business venture. But as a first-timer, you should start with the best strategies. Here are 5 brilliant tips everyone should know before they get started.
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Use Leverage Wisely & To Your Advantage…
Leverage will give you the ability to make the most out of your initial investment money. What is leverage? In basic terms, leverage is borrowed money; using this debt as a downpayment within real estate, allows one to invest without buying a property all at once. Hard money lenders are great resources to use when you decide to borrow.
While it may be more advantageous to buy a personal home outright, leverage can help with investment properties. For instance, you could use an entire $100k loan on one rental property. Or, you could split that loan into 5 $20k down payments on several properties.
Using a hard money lender can help accumulate the other initial investment money needed, should you go the latter route. But it’s ultimately up to you, and your real estate investing goals.
Buy in Popular, Up-And-Coming Areas
You’ll want your investments to grow over time and earn as much money as possible. Getting in on new, or revamped up-and-coming neighborhoods is key.
Not only will you be able to buy in at an affordable rate, but rental income can increase over time. You’ll soon be able to earn 2-4x what your initial investment was.
Before home prices in well sought-after areas aren’t as advantageous to buy, make sure you get in before the big boom. This requires some research and deciding which areas are worth the investment. You may also want to decide if international investments are part of your goals. Study professionals, like David Ebrahimzadeh, on international real estate before you decide to stick close to home.
Add Value To Your Investment Over Time
Your property will only earn what it’s worth as time goes on. To keep your real estate investment a profitable venture, upgrade as needed.
This goes beyond the bare minimum of maintenance and upkeep. You’ll want to keep up with current home trends to keep your investment looking its best.
While you want to keep the integrity and structure of your property strong, smaller add-ons can increase value as well. Upgrading simple things like cabinets, countertops, and flooring are cost-effective measures to keep your investment earnings high.
Learn The Rules Before You Start
You’ll save yourself a lot of headaches, and money, if you know the rules. Often, new real estate investors make poor decisions and only learn the true consequences after the fact.
With any property, you want to learn all the laws and regulations associated with that property. Example: zoning laws, and whether you can build onto existing properties. Or, if you’ve bought a home within an HOA; what are the covenants your tenants will have to follow?
This kind of research should always be done before you close, so the deal is ultimately the best property for your investment. This will save you from disappointments later, should you discover expansion isn’t an option. Or, your HOA doesn’t even allow rental properties.
Decide If You Need A Property Manager
If your real estate investments are all within the same location, it’s much easier to manage. If some are outside your area, you may have a lot to juggle.
Regardless, the day-to-day operations of property management is a full-time job itself. You may want to hire the expertise of a legitimate property manager to handle your investment properties.
A property manager will keep track of all maintenance projects, and act as a liaison with rental tenants. Giving you the freedom needed to pursue your other passions and projects.
