The goal of real estate investment is to put your money to work, allowing it to increase over time so that you get a good return in the future.
The return or profit you make in the future should be enough to cover the taxes you pay, the risks taken, and other costs related to property investment, such as regular maintenance, utilities, and insurance.
Property investment can be as easy as playing Monopoly for beginner investors. What’s important is that you understand the fundamentals to real estate investing such as risk and economics.
Buy properties and generate rent to get the money you need to buy even more properties. You must also avoid bankruptcy.
Note that investing in the real estate being simple doesn’t mean it’s easy. Mistakes have consequences that range from major disasters to minor inconveniences.
Property investment is one smart way you can put your money into use. Whether you want to buy a single-family home to rent out or for yourself, or looking into a multi-family residential property, your investment is safe and stable.
Putting your money in a mix of investments, including properties, is a smart move towards planning for retirement. Unlike the stock market, real estate investment provides physical assets you can use as proof of your expenses.
Although property investment may seem overwhelming to beginners, it’s not the case. Beginners will undergo a learning curve as they invest in the property market. However, you can adopt various strategies to minimize chances of making costly mistakes.
First, you must have a good credit before investing in this market. A secured credit card can help you repair a bad credit before you begin investing in real estate. Here’re a few tips to help you get started as a beginner investor:
1) Start slow, no need to rush
You can be tempted to buy a property without taking your time. It’s important to understand the prevailing market conditions first. For instance, the rental value of properties, neighborhood factors and how properties hold their resale values.
View and explore over 100 properties before you make the decision to purchase one. Take your time because what you’re about to do is a big decision and long-term commitment. Do not rush!
2) Start small
Don’t buy several properties at once.
First buy a single property or a multi-unit or duplex property with a few units. With the single property, you’ll learn so much as you work on your investment.
You can buy more properties over time as you gain experience in the industry and get more involved in it. Don’t rush or buy more and get burned out early. Grow with your investment!
3) Get to know your market
Find out everything you need to know about your market. And, don’t just depend on other investors and real estate agents to learn everything about the market you intend to invest in.
Instead, do an independent research and find out the value of properties in that neighborhood. With knowledge of your target market, you’re bound to make good decisions and be successful in your investment.
4) Buy REITs
Real estate investment trust (REIT) allows you to invest in the property market without actually buying a physical property. They’re like mutual funds.
Large companies own commercial properties such as apartments, office buildings, retail stores, hotels, and other types of business properties. REITs allow you to invest in such companies.
The companies pay dividends quarterly, bi-annually or annually to their investors. This makes them a good choice for investors. Invest in publicly-traded REITs as a beginner. You can buy your investment through a real estate broker.
Search popular finance sites online or find stock market newsletters to read for the best investment stocks to buy.
5) Buy rental properties for investment
Rental properties provide passive income. Whether you buy a property for rental or live in it while hosting guests in extra rooms, you’re bound to make some good money.
However, property maintenance or hiring a manager to run your investment makes real estate partially passive. But, generally, the investment is stable.
Consider “house hacking,” where you live in an investment property and rent out other rooms to guests or live in a single unit while use the rest for rental purposes.
If you opt for house hacking, you can offer more value to your guests. For instance, you can provide indoor games for entertainment purposes. Whether you are looking at air hockey, there is something bound to please your guests.
You can also buy turnkey real estate, an even better investment option. It involves buying old properties, renovating them and leasing them to renters. In most cases, the properties already have renters, meaning you don’t have to do much.
Your first pay check is an instant profit. You can use it to pay your mortgage.
6) Flip homes
Flipping homes is a lucrative business just like you see it on HGTV. What’s important is that you know what you’re getting into or doing. It involves buying a low-cost home, renovating it and selling it for a profit.
Although flipping homes isn’t as easy as it seems on TV, it pays well. However, it comes with more risks. Therefore, it’s important to predict the costs of renovation accurately and sell fast. This reduces the time it takes to pay for the home.
Keep in mind that there’s a likelihood that the home won’t sell, or may take lots of time before it sells out. But, flipping homes is the right investment option if you or your partner possess DIY skills for home renovation.
7) Purchase a rental home for vacation
A rental property for vacation is versatile; you can use it for different purposes. You can rent it out to those on vacation, and even get to go for vacation there yourself. You can buy a condo or vacation home where you live for some months and rent it out for the rest of the year.
Depending on the type of property you buy and its location, return on investment varies. On the con side, vacation properties are usually situated far away from your home of residence. This means that you have to hire property managers to care for your investment. It would be great also if your rental home has some amenities that can attract people to rent it. It can as simple as a television, wifi, swimming pool, or ping pong tables for the guests to be entertained.
8) Invest in a commercial property
Investing in commercial properties is common among experienced investors because it’s more costly than getting into the residential market. However, it generates more cash flow than real estate investment.
On the cons side, tenants may delay with payments or leave empty spaces when they vacate. And, you still have to pay mortgage even with empty spaces.
What’s more, commercial properties have long leases, meaning you won’t have to raise rent for about 5 to 10 years. You may have stable tenants, but can’t adjust to changing market prices regularly as in residential properties.
When investing in the real estate as a beginner, do your research well, start small, don’t rush and opt for a mix of long-term and short-term goals. Learn more about your target market and talk to industry experts.
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