Investing in the real estate industry is an attractive choice for many. There is no denying the fact that the real estate industry is an actively booming one, where there is so much room for financial growth. Like any other industry, however, real estate is not without risks, and because it will take so much of your time and hard-earned money, you have to make sure that you are not investing in a sour property.
Learn the best tips for real estate investing here, all from the experts themselves and the companies in this industry:
- Pay A Significant Down Payment
Yes, it is true that your real estate property is going to be one of your best and strongest assets. Unlike your car, this is an investment that has little to no depreciation over time, and by the time you finish paying off your mortgage, the value of your property will already have increased. Hence, even if you decide to sell your property right then and there, you can already earn a little interest on top of its value.
But to be very prudent with your investment, however, companies suggest that it is best for you to pay a hefty sum for your down payment upfront. Remember the basic rule: the bigger your down payment, the lower your monthly mortgage is going to be, and the faster the payment period will be as well. If you’ve got sufficient savings to pay a sizeable down payment, then do not skimp on it. Do not risk having your monthly budget suffer simply because a huge percentage of it will have to go to your mortgage payments.
- Always Keep Your Budget In Mind
There is no need for you to be pressured by the realtor trying to sell you a property that you can’t afford. To save you some time and stress, mention your budget immediately and make it a point to stick to it. That way, in your process of selecting properties, you can be sure that all the options that are opened up to you are all within budget. There is a property for every budget and every need, whether you are buying your first home, a vacation house, or a commercial property; hence, there is no need for you to go all out with one that is simply beyond what you can afford.
- Factor In A Little Budget For Repairs, Too
One of the most common mistakes committed by real estate buyers is that they forget to factor in the cost of repairs for the property they are going to buy. Hence, it takes them so much longer to have rent checks coming in because, for starters, the repairs are stagnant due to a lack of budget.
No matter how perfect a property may be, there may still be that tiny repair job that you need to do, or you want to do as a matter of preference. Do prepare a budget as well for the repair and improvement of the property. With this amount ready, you are making it faster for your property to be ready for tenants should this be your intended purpose.
- Do Not Be Afraid To Go For House Flipping
If you are a little low on the budget end, there is still a real estate investment right for you. Investment companies have now come up with house flipping, which, in essence, is the process of purchasing distressed and worn out properties and flipping them over into brand-new ones after repairs, usually completed within 90 days. The purchase price is often meager because the property itself is already undervalued due to the repairs that have to be done. However, investment companies also found out that the after-repair value (ARV) of these homes are significantly high.
The return on investment for these types of properties should at least be higher than 20%.
- Do Not Be Afraid To Start Small
Every big company or business initiative always had to start small somewhere. The same is true for your real estate investment. If it’s what you can afford, then don’t be dismayed by having only one apartment to rent out for now, or one property. Keep in mind that buying too many properties at once can also pose more significant risks and challenges. If you want to stay smart and safe, start small, one by one, and let your real estate investment portfolio grow from there.
When looking to invest in the real estate industry, the good news is that there are numerous options for you to choose from. However, whatever your chosen property and investment type, the best thing for you to keep in mind is always to seek the help, advice, and mentorship of those who are experts in the field. The more that you learn, the better your chances of earning well from this chosen investment portfolio.