If you’ve recently thought about investing in real estate to either round out your retirement portfolio or simply earn some extra cash, you’ve chosen a potentially great way to make extra money. Your monthly rental income can produce healthy personal cash flow and your property could appreciate in value over time. However, no investing strategy is as easy as it sounds, and if you’re just getting into the real estate game there may be a bit of a learning curve. Here are seven property-savvy strategies to get you started.
- Don’t Start Big
There’s no need to start out by buying a 50-apartment complex or expanded real estate investment (unless you have the experience and capital). Your best bet is to start small. Get yourself a single condo or house, which allows you to get your feet wet and explore what it’s like to be a landlord. You may find that you love it, and end up making more real estate purchases over the years. On the other hand, if you decide it’s not for you, it’s much better to find out after a single, small investment.
- Learn About Different Real Estate Investments
Real estate investing does not fall under one umbrella. You can invest in residential, commercial, or industrial property, and there are also real estate investment trusts (REITS), and other types of investments to consider. Take a look at them all to understand which is the right fit for your goals.
As you do this research, also think about the specific type of real estate you want to get into. You can buy a distressed property, fix it up, then sell it at a profit. You could also buy a property to rent that may need very little fixing up, or purchase a place that’s rent-ready. The decision is yours, and the options are endless.
- Keep Your Emotions in Check
Investing in real estate can be an emotional thing. In many cases, you either love a property or you don’t, but from an objective standpoint, you should review it for its resale potential. It doesn’t matter if you love the floor plan or amenities, it all depends upon how much you can get for the property when the time comes to sell.
- Review Your Credit Score Now
Oftentimes your ability to access financing in order to invest in real estate depends upon your credit score. If your score is low, work immediately on bringing it up by paying your monthly bills on time, lowering your credit card balances, and not opening up too many new lines of credit before you’re ready to sign on the dotted line.
- Secure Financing & Call Me, Your Realtor!
Since you’re more than likely financing some of your own investments, start shopping for financing options. Although you should definitely look to your current institution, you may find better rates with the competition.
You also need to find good investment properties so be sure to call me, your realtor.
- Have an Exit Strategy
As with any other investment, the real estate market can go south virtually anytime. Even though things seem strong at the moment, we could face a downturn similar to what took place in 2008 and 2009. Acknowledge that the time may come when you need to cut your losses, and be ready to make a sale whenever the need arises.
- Reach Out to Investors in Your Area
As a beginner, you should research online whenever possible and also reach out to local real estate investors who can give you more personalized advice and tips. One of the best ways is to use a website like Meetup, which often lists local gatherings of real estate investors. Pick their brains for any questions you might have, along with other pointers they can provide.
Investing in real estate requires forethought, research, and discipline. Just make sure you know what you’re getting into before you take the leap and you have a great team of people there to assist you along the way.
