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No matter how much you hear about crypto and stocks, there’s only one investment that’s truly withstood the test of time. Even today, millionaire investors still agree that real estate is the best investment around, which should come as no surprise. It’s tangible, it offers plenty of investment options, and it’s always in demand.
If you’re interested in starting with your own real estate endeavor, then you’ve come to the right place. Let’s talk about some real estate investing tips to secure your investment from the start!
1. Save Money
Always crunch the numbers ahead of time to see how much you should expect to need for a down payment in your area. You may be able to get away with a down payment of under 20%, but this will come with mortgage insurance and other additional fees. Essentially, you’ll save money by saving money.
Once you have an idea of how much you’ll need, try to save up that much with enough to get you through the first six months without income from the property. You never know what expenses could arise within that short period.
2. Choose an Investment Type
One of the most important tips for real estate is to choose a niche and learn all about it. It’s always a great idea to read stories or ask questions so you can learn from similar investors. Depending on your goals, you could benefit most from certain types.
If you want a steady, long-term, predictable income. In that case, rental properties, commercial real estate, or REITs are your best bet. The best part is that, while you earn that income, you’ll always have the house to resell if you choose.
Now, let’s say all you want is to earn a lot of money on the backend. You could try flipping houses, flipping properties, or building condos. Conversely, no two real estate investments are the same, so it’s important to understand the ins and outs of your investment strategy.
For example, commercial real estate investing is entirely different from owning a 3-unit residential building. There are different laws, pricing guidelines, building requirements, and so much more. However, they can also be more profitable and secure, depending on the location!
3. Choose the Right Location
No matter what type of investment you intend to pursue, we strongly recommend doing your homework and finding the right location. It’s a cliche for a reason.
Let’s say you buy a rental property in Massachusetts or New Jersey. These are densely-packed, suburban states with many workers commuting to major cities. In that case, buying a rental property with quick access to public transportation lines or highways would be a far safer investment than buying a property in the rural parts of these states.
If you’re buying commercial property, the same logic applies. Where is the traffic? Properties in downtown areas or right off of highways would be your safest bet.
4. Choose the Right Property
Buying in an up-and-coming neighborhood can get you pretty far, but the property itself needs to be accounted for. These are the two aspects that can doom your investment before it even begins!
Regardless of your type of investment (even a flip), you will need a thorough inspection of the property to ensure that it meets your needs. There are certain issues you could easily fix yourself or have done for a reasonable price, but any structural issues could tank your investment within months of closing. Read inspection reports and disclosure forms thoroughly before making any decisions!
Before purchasing, try using a rental property calculator, which you can adjust for any investment type. From there, add numbers on the high end of your expectations and see if they work out in your favor!
5. Don’t Overdo Repairs
Some basic rehab could help increase the value of your property significantly, but there’s a fine line to tread. For commercial property, repaving the parking lot could be a great idea. However, tearing down the building to build what you want could be a money sink.
While that’s an extreme example, the same applies to a house flip or a rental property. Repainting, replacing hardware, and some basic landscaping could be done yourself for very little money, but a major kitchen renovation will likely cost more than the value it will add to your home. Always weigh out these expenses before making a decision.
6. Consider Diversifying
Real estate is one of the safest investments out there, but that doesn’t make it safe. If it was entirely safe, everybody would be saving money for a down payment.
Diversifying could be as simple as taking a commercial property loan and buying one commercial property with a lot of diversity within it. For example, a space for a grocery store, restaurant, gym, and doctor’s office in a convenient location is likely to succeed with proper management.
Otherwise, diversifying between neighborhoods, towns, types of investments, and more could secure your investment for the long run. If this is a retirement nest egg for you, we’d strongly suggest finding ways to diversify. The good news is that once you have one property, it’s a lot easier to save for the next!
Put These Real Estate Investing Tips to Use
Now that you know some helpful real estate investing tips, why not put them to good use when you start investing? Real estate is undoubtedly one of the best investments available, but it also requires one of the greatest learning curves.
Once you’re confident enough, start investing in real estate, grow your business with these tips, and stay up to date with our latest investment tips!