How To Start Investing In Real Estate
Investing in real estate can be one of the most lucrative ways to spend your money, however, like most things in life it takes time to actually get good at it. If you’re a novice in the world of real estate investment but are interested in building your portfolio and ability to strategize ways of making a profit, then these basic tips will steer you in the right direction before taking the leap.
You have to get organized, first of all. Figure out what type of investing you want to get into and hire an agent who can guide you in the right direction in terms of your investment. Unless you’re already a well-equipped expert in all things real estate, you should definitely have someone who’s actually working in the field in your corner. The last thing you want is to invest in a property only to lose everything and owe money; having an expert with you will steer you away from that.
Once you have an expert in your corner, create some sort of spreadsheet-like visual that can help aid your decision making process in terms of what to invest in. This is where you’re going to want to write out your general budget, the potential deals that you have in queue, current market values/stats for the upcoming months (your expert can help with these more specific ones), mortgage/rental/utility monthly costs, and any other detail you want to keep in mind before pulling the trigger on an actual investment.
Use your visual aid to compare and contrast what areas certain properties thrive in, and are weak in. The visual element is crucial and worth repeating because if you literally see multiple red flags appearing with a certain investment opportunity as you’re writing it out, it’ll be easier to toss that one aside to make your decision much clearer.
It’s also important to remove any emotional attachment you may have with a potential property. Remember, you’re investing in the numbers of a rental property for profit, which is your end goal. It can be easy to take on a property, get passionate about whatever work needs to go into it, flipping it to fit your personal aesthetics, and thus overspending in order to satisfy your own desires.
This is another example of how a visual aid can assist you in remaining objective and focused on the end goals. Once you have your investment property set up and ready to put money into, list out everything that needs to be accomplished, and the predicted costs of those necessary changes. After the needs, make a separate list of a few wants that you’d like to see done to the property personally. After you do all of the proper calculations with your expert partner, if there’s room for a few of those “wants” to be checked off the list, look at how much money you’ve already spent and THEN determine if further work would be worth it or not.
If you can, buy local. This isn’t a necessity but it can definitely make your investing process a lot easier if you’re physically close to the property itself. Then, once the property is purchased, assuming you have a life outside of this investment, consider hiring a property manager. The property manager can be the same “expert” that’s been mentioned throughout this article.
A property manager will dedicate the time, skills, and temperament it takes to run a property that another individual has invested in. They also can help you with more difficult processes that investors face, such as needing to evict certain renters if they’re late on payments. A property manager is trained and it’s their literal job to know all the ins and outs of running an investment property.
Regardless of when and how you decide to make your investment, just make sure you’re taking the time to do it right. Do your research, do it again, and once more. Hire professionals who are experienced, knowledgeable, and want to see you succeed in your investment, and get to it!
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.