Getting Started in Real Estate Investing
Even if you are new to real estate investing you can still be successful. As with most endeavors, education and information are the keys to doing this. With a few steps you can turn your new real estate investing career into a profitable enterprise.
Know Your Financial Status
The number one thing to know when getting into any new business is where you stand financially. Can you afford to put down the recommended 20 percent of a home’s purchase price? Can you buy it outright? Then maybe consider living in the investment for a year to get the owner-occupied lower interest rates. This will allow you receive lower interest rates, work on what needs to be done to the home, and won’t weigh you down with second rental or property loan rates. If your savings are not enough to buy outright, look into the foreclosure market to find homes that are selling for below their market value. Whichever option you choose, take the time to carefully decide which is financially right for you.
Know the Potential for Cash Flow
Keep in mind that not every home you buy can be flipped quickly for a profit, no matter how simple reality television makes it look; real estate investing is not always that profitable that quickly. Remember any renovation is going to take time and money so you need to take the time to really understand out how you will put money into the home versus what you will get out of it in the end. Don’t overlook the possibility of renting out the home to pay down the mortgage and other costs. Run this scenario when working out the cash flow as well to see where you will land and what might be left over as profit.
Know the Type of Investment You want to Pursue
When it comes to real estate investing, you have options when it comes to what types of investments you can make. You don’t have to rely on direct ownership participate in real estate anymore. Look into partnerships, publicly traded investment trusts and real estate investment trusts (REITs) if you are not yet sure you can make the investments on your own. Each is designed to allow you to work with others if you are not ready to go it on your own just yet, reducing the hassle of management in the process.
Real estate investing comes in many shapes and sizes. Regardless of what your personal investing flexibility is, the keys to success are in being clear with your financial standing and objectives while educating yourself about the types of investments available.