Purchasing a house or property is about more than setting up a home. Although quite a number of people buy real estate to establish their future, long-term abodes, many others recognize the potentially lucrative investment that lies within a real estate purchase.
Despite the ups and downs of the economy, real estate has become a common investment vehicle — one that has plenty of potential for making big gains for those who are willing to put in the effort. According to the experts at Entrepreneur, even in a bad economy, real estate investments will usually fare better than stocks. Real estate also continues to appreciate despite the occasional economical slow-down.
Like any other endeavor, there is a right and a wrong way to go about investing in real estate. Novices may not know where to begin their first forays into the real estate market as investors, even if they already own their own homes. Buying a property as an investment is an entirely different animal than buying a home to establish a residence. However, with the right guidance, anyone can dabble in real estate.
Establish financial goals
Before you even begin looking at properties or put forth the effort of meeting with an agent, you must determine what you expect from the investment. The days of buying real estate and flipping it for a fast profit may no longer be here. However, real estate can provide a steady stream of long-term income. Understand what you hope to achieve by investing. If it’s to become an overnight millionaire, you may be looking at the wrong investment vehicle in real estate.
Establish a plan
New investors who do not have a plan in place will likely spend too much or have more setbacks than others who have planned accordingly. When investing in real estate, it’s more about the bottom line than the property itself. According to Springboard Academy, a real estate academy for investors, look for motivated sellers and stick to a set purchase price. Try to make offers on a variety of properties that work in your financial favour. And know what you want to do with the property (i.e., renovate and sell, remove and rebuild, or rehab and rent) before you buy. Fit the house to the plan, and not vice-versa.
If this is your first time out there, stick with properties that will turn over quickly. Research areas in and around urban centers or close to transportation and shopping. A good starter property is a small house or a condominium that can be refurbished and then rented. Rental properties offer steady sources of income when renters are properly vetted, offers Investopedia, an investment resource.
Look at many different properties
Become an expert by learning as much as you can about what is out there. Attend open houses; look for vacant/unattractive properties; scour the classifieds in your local paper; or put the word out there that you’re interested in buying a property. Only look at properties that have motivated sellers, because then you’ll get closest to the price you want to pay. And don’t forget to research the area and the home turnover rate for the specific area where you are looking. Don’t make assumptions that a property will appreciate without doing your homework.
Real estate can be a worthy investment opportunity. With research, a plan and the right price, just about anyone can be a real estate investor.