Things to Look For When Investing in Real Estate
Investing is one of the best ways to ensure your money is working for you. There are dozens of different ways to invest, but one of the most popular and prevalent is to invest in real estate. While some people can make huge profit extremely quick through real estate, others can lose a lot, just as fast.
As a result, it is quite important to not only know what to look for in a real estate investment but also things you should think about and consider when investing. This article will look at not only things to look for when investing in real estate, but also some general tips to ensure you become the best real estate investor possible.
Do your homework
There is absolutely one thing everyone who is investing in real estate should do, and that is research. Without research, you will be going into deals uninformed and that is a great way to lose money or simply not get what you wanted. You not only need to research each home individually, but also things like buyer and renter behavior in your area, the market itself, and more.
While this can take time and be cumbersome, a home is a giant investment and should be treated as such. The more time you put into research, the better equipped you will be to not only get a great property, but get a great deal on it too.
Location, location, location
You can change the color of a home, the layout of a home and basically change anything you want about a home, but one thing you cannot do is move it to a new location. As a result, the location of a property should be one of the first things you think about and look for when investing in real estate. While each buyer is different, there are some things you can look for.
The location should be in a safe area, with good access to things like parks, schools, public transit, and other desirable amenities. Also, it couldn’t hurt to know if a neighborhood is on the up and up or if it is losing popularity. If you can get an affordable property in an area that is growing in popularity, it can be a home run investment.
What’s the purpose of your investment?
Before you ever purchase a property to become a real estate investor, you need to be very clear about your goals and purpose for the investment. Generally, there are a few different categories that most real estate investors can fall in. You can buy with the purpose of renting out the space, buy with the purpose of selling in the short term (essentially “flipping”), or buy with the purpose of selling in the long term.
Once you figure out your purpose for the investment, you should come up with goals. These goals will differ depending on your purpose. For example, a landlord might have a goal of getting $1,500 a month for the house, while a seller might want 1.5x his investment back within X amount of years.
Look for a home with the right improvements needed
In a perfect world, when looking for an investment property, you would be able to find something affordable that doesn’t need any work at all. Unfortunately, in the real world, finding that sort of deal is like finding a needle in a haystack. If you want an affordable property, it will generally come with a bit of work. The key to a successful investment property is getting one that needs the “right” kind of work.
What we mean by that is that you should look for cheaply-priced homes with small or cosmetic fixes needed, but avoid cheaply-priced ones with major issues or structural damage that needs to be taken care of. Fixing some paint or replacing some doors is infinitely easier than redoing an entire roof or re-paving a driveway.
Will the property be a good investment in the long run?
The ultimate goal of an investment property is to make you money or bring you some sort of value. Before ever getting a mortgage or agreeing to purchase a property, you need to think long and hard if the property will be a good investment, not only in the short term, but also the long.
While you can’t tell the future and see whether or not the investment will work out, there are some things you can think about to help. Think about the trends in neighborhood popularity, the demographics of the neighborhood, the future plans for the area, and more. Remember, unless your plan is to sell quickly, you will be the owner of this place for many years and should do everything to ensure you are prepared.