Investing in real estate is a tried-and-true path to making money. That doesn’t mean real estate is necessarily easy to break into, especially for newcomers. What kind of properties should you buy? Should you make risky investments? Should you go big or start out small? All of these and more are questions that people ask themselves when they’re considering breaking into the world of real estate.
Research
You can’t make a well-informed decision without the right information. Without thoroughly researching the property, you’re essentially taking a shot in the dark. Instead, learn everything you can about the property before you decide to invest in it. What kind of neighborhood is it located in? How does its value compare to that of neighboring properties? What kind of shape is it in? And if it needs work, how much money do you have set aside to invest in improvements?
It’s important to get clear answers to all these questions before you decide if the property is the right one for you. Be sure to put some serious thought into how you’d like to use the property. Are you planning to rent it out or fix it up and flip it for a quick profit? Your criteria for a rental property won’t be the same as a flip.
Start Small
When you first decided to get into real estate investing, you may have had visions of buying an entire apartment building or selling penthouse condos. While it’s certainly good to have ambitious goals, don’t shoot yourself in the foot by setting your sights too high at the start.
Save the risky investments for later, and instead focus on safe wholesale properties in the short term. When you’re first starting out, you only have a limited amount of capital to work with. If you lose it all in a deal gone wrong, it’s extremely difficult, if not impossible, to get it back.
Your first real estate investments should be small and practical. Buy a single apartment instead of an entire apartment building. Purchase a multifamily home and split it into multiple rental properties instead of trying to flip one sprawling, palatial estate. Picture your real estate investments like a snowball. It starts out small and grows bigger as it gains momentum.
The Risk
Even “safe” investments are a gamble because there’s always a risk that they won’t pay off. That’s simply the nature of investing in real estate. It can be an especially tricky market to delve into. Investing in real estate is a gamble because the market can be hard to predict. Housing market bubbles and economic recessions have a major impact on the value of investment properties.
Bad investments happen to even the savviest investors. There are so many factors that influence the housing market, and most of them are out of your control. Although real estate investment has its risks, you can set yourself up for success by doing your research and starting out small. Ready to close your first deal? Check out the many other helpful resources that are online.
Need professional photographs to showcase your property? Book an appointment with us today!