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Real Estate Investing 101

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Have you ever considered investing in the real estate market? While various alternative investment opportunities exist, real estate tends to be a highly popular and lucrative choice. Advantages include increased cash flow, tax benefits, equity and more. Whether your goal is to launch a new career or generate supplemental income, real estate endeavors present many opportunities for fortune and success. With proper research and careful consideration, property investments can be incredibly successful.

 

Learn the Basics

Prior to jumping into the real estate market, carefully research what types of initial investments best suit you. Does a sole proprietorship seem like the best fit, or would you prefer to buy into a property with a partner or a group? Consider your budget and timeline, and determine what style seems most beneficial for your lifestyle.

 

For the most part, investors new to the market begin with a purchase of a single-family rental. This is generally the least expensive option and lowest commitment level available, making it a great place to start. Monthly rent results in regular cash flow, allowing investors to potentially grow their empire further.

Not handy enough to be a landlord? No need to fret: hiring a property maintenance company allows you to delegate the small jobs and focus on the big picture. Such companies come with a host of benefits including tenant communication, property marketing, maintenance and repairs. While rental properties are relatively straightforward and produce consistent residual income, they necessitate dedicated involvement. Hiring help to assist is an efficient way to free up your time for additional projects.

 

Secure Financing

Before you begin combing the market for investment properties, ensure you obtain pre-approval for a loan. From there, determine which financing option is best for you. There are several options to consider including conventional loans and asset-based mortgages, so spend some time studying your choices and opt for what works best for you financially.

 

Of course, if you can pay cash, there is no need to secure a loan. Sellers prefer cash buyers, as these offers generally close faster and provide the seller with clear proof of funds. Additionally, if you have the money, cash provides financial stability: if you experience a gap between tenants, you eliminate the risk of paying your mortgage out-of-pocket.

 

Choose a Location

You’ve heard it before. The number one priority of any real estate investment is location, location, location. Scope out your local market, and make sure to account for current trends such as an influx of jobs or population growth. Next, consider school districts, crime rates and public transportation options. Let this analysis determine the location best and most appropriate for you. Remember, this property is not for your personal use, so be sure to consider the renter’s mentality when settling on a location.

 

Contemplate a Flip

“Flipping” refers to purchasing a home, renovating it and selling it promptly. Flipping a home takes substantially less time than renting a house: investors have the opportunity to make extraordinary profits from one transaction, where rental properties take years to accrue equal earnings. That said, the strategy is risky, and oftentimes flippers lose money on their investments. Therefore, ensure you have a realistic grasp on the current market before purchasing the home so that you choose the best possible location for the price. Finally, always set a reasonable budget for the renovation, and remain within the allowance for the project. Remember to account for hidden costs and fees, as these will likely materialize at one point or another.

Whether you choose to rent a property or flip a home, investing in the real estate market takes time, research and analysis. Experts recommend all beginners start small: little mistakes are much easier to handle than larger, more expensive errors. If you dream of a career in property investing, kickoff your research today. In no time, you will be on your way to a real estate career full of prosperity and success!

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