How to Be Successful In Real Estate Investment?
Real estate is said to have made more millionaires than anything else. For those who have successfully made money in it, it is not hard to see why. Here is our rundown of how to become successful in real estate investment.
- Choosing Your Market & Timing The Investment Wisely
For a successful real estate investment, it is important to know your local market. The real estate markets move in cycles due to the desire for economic profits, and every real estate market is at a slightly different phase of its housing cycle. You need to find markets that are in the phase of expansion – where sales and prices are rising, affordability is good, construction is low and capital investment is rising.
- Buy Low
The return on investment is based on how cheap you bought the commodity. A cheap little house in an unsafe neighborhood can be bought for little money, but you will not get much money from it, either. Hence, make a point to find a good deal in a thriving neighborhood.
- Tap into the Hidden Market
The ideal case is buying property from a distressed seller because you can get it way below the fair market value.
- Understand Your Costs Up Front
If you are new in the business of real estate investment, it is crucial to understand your costs upfront. It is not just the cost of the property and realtor commissions. You will need to pay for repairs, and too many newcomers to real estate investing do not know how to accurately estimate costs to repair that cracked foundation, fix electrical problems and address pest infestations.
- Understand The Market
One of the best ways to avoid problems when investing in real estate is to understand the market. Understanding your real estate market will help you to evaluate the price of an investment property. Know how much the typical house in a community is worth per square foot and the rent you could charge for a given investment property. Renovate properties in ways that make it more appealing to the expected buyer.
- Manage Your Risks In Real Estate Investment
You can manage risk in a real estate investment in several ways. First, do not go deeply into debt. Second, maintain a large cash reserve. Third, if you cannot handle the potential stresses of fix and flip, buy turnkey properties instead.
- Maximize Value of Real Estate
Look for ways to maximize the value of the real estate, eking out more profit for the same investment property. It could involve renting out a corner to a bank to install an ATM. You could rent out space in the lobby for a small business, generating rental income from what otherwise failed to add to the business’s cash flow. Or add a concierge or security guard to the building. Now you can charge higher rent for a more attractive property.
- Know the Rules and Regulations of Real Estate Investment
Never assume you can add another room or second story to a building. Understand the degree of work that requires a permit before you start it.
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