King bell
VIP Contributor
There are few things more satisfying than a home of your own, and for many people, investing in real estate seems like the surest route to get there. But is it really so simple as just buying a house? We're not talking about a home-buying beginner here — we're talking about seasoned investors looking to play the market. Investing in real estate should be carefully considered with all of the risks and benefits accounted for before you take that plunge.
More often than not, property owners are more in it for the pastime than the profit. Whether you're looking for a place to call home or a way to make huge returns on your money, buying and selling homes can be both a lucrative and headache-inducing experience. Here are some tips to help you navigate the world of investing in real estate.
Step 1: Save up for it
Investing in real estate requires serious cash, especially if you're looking to do it right. You'll need enough money saved up to cover initial costs plus build up a healthy cash reserve so that you don't end up losing your shirt if things go south. Although prices vary depending on your chosen market, a good rule of thumb is to have at least $100,000 set aside for the initial cost of the property and between three to six months' worth of rent. If you don't have that kind of money saved up, then selling off some assets or cutting back might be what you need to do in order to save up — or keep saving until you're able.
Step 2: Find a realtor
When it comes to finding a realtor, trust your gut. If you've been around the block enough times and know that someone isn't your first choice, then take note and move on. The same goes for their knowledge of the market. If their statements sound dubious or if they can't answer your questions in a clear manner, then you might want to find someone else (or do a bit more research). But always remember that this is your money — don't let anyone push you into making decisions that aren't right for you.
Step 3: Research your market
Find out what the area you want to invest in is like. Is it growing? How's the neighborhood? What sort of crime rates are there? How much does it cost to get in and out of the area, and what sort of commute is involved? Find out everything you can about the area before you decide where to put your money. It's also a good idea to look into property taxes, since they vary from region to region. Before deciding on a location, look into these factors that may affect your investment's value.
Step 4: Look for the "perfect property"
You may be looking for a great investment, but the perfect home is still something you want to find when it comes to investing in real estate. A problem-free home with desirable features and an excellent location is ideal. It may take some time, but you'll find it — and if not, you can always return to Step 2.
Step 5: Set a price and set a limit
Don't overspend on your property — even though real estate tends to have long-term earning potential, you don't want to spend more than you need to. It's tempting to think that those with good real estate investments will make a ton of money, but the reality is that it's more likely that you'll lose your shirt. Look at what people in your area are paying, and base your price on that. Again, don't be afraid to move on if you're not happy with the price — if it doesn't feel like a fair deal, then it isn't.
Step 6: Rent out your property
Before you decide to buy a property, consider renting out a room or two of your house while you're waiting for the market to turn around. You don't have to do this if you're not interested, but it's a viable option that may make sense if you're a bit hesitant about investing in real estate.
Step 7: Look into home loans
Home loans are available to help you get a place that's both affordable and efficient. If you're looking to buy the property outright and are willing to wait, then consider refinancing your home loan so that you can save on your interest payments. Whatever your situation, it's important to be aware of all of the options out there before deciding on what works best for you.
More often than not, property owners are more in it for the pastime than the profit. Whether you're looking for a place to call home or a way to make huge returns on your money, buying and selling homes can be both a lucrative and headache-inducing experience. Here are some tips to help you navigate the world of investing in real estate.
Step 1: Save up for it
Investing in real estate requires serious cash, especially if you're looking to do it right. You'll need enough money saved up to cover initial costs plus build up a healthy cash reserve so that you don't end up losing your shirt if things go south. Although prices vary depending on your chosen market, a good rule of thumb is to have at least $100,000 set aside for the initial cost of the property and between three to six months' worth of rent. If you don't have that kind of money saved up, then selling off some assets or cutting back might be what you need to do in order to save up — or keep saving until you're able.
Step 2: Find a realtor
When it comes to finding a realtor, trust your gut. If you've been around the block enough times and know that someone isn't your first choice, then take note and move on. The same goes for their knowledge of the market. If their statements sound dubious or if they can't answer your questions in a clear manner, then you might want to find someone else (or do a bit more research). But always remember that this is your money — don't let anyone push you into making decisions that aren't right for you.
Step 3: Research your market
Find out what the area you want to invest in is like. Is it growing? How's the neighborhood? What sort of crime rates are there? How much does it cost to get in and out of the area, and what sort of commute is involved? Find out everything you can about the area before you decide where to put your money. It's also a good idea to look into property taxes, since they vary from region to region. Before deciding on a location, look into these factors that may affect your investment's value.
Step 4: Look for the "perfect property"
You may be looking for a great investment, but the perfect home is still something you want to find when it comes to investing in real estate. A problem-free home with desirable features and an excellent location is ideal. It may take some time, but you'll find it — and if not, you can always return to Step 2.
Step 5: Set a price and set a limit
Don't overspend on your property — even though real estate tends to have long-term earning potential, you don't want to spend more than you need to. It's tempting to think that those with good real estate investments will make a ton of money, but the reality is that it's more likely that you'll lose your shirt. Look at what people in your area are paying, and base your price on that. Again, don't be afraid to move on if you're not happy with the price — if it doesn't feel like a fair deal, then it isn't.
Step 6: Rent out your property
Before you decide to buy a property, consider renting out a room or two of your house while you're waiting for the market to turn around. You don't have to do this if you're not interested, but it's a viable option that may make sense if you're a bit hesitant about investing in real estate.
Step 7: Look into home loans
Home loans are available to help you get a place that's both affordable and efficient. If you're looking to buy the property outright and are willing to wait, then consider refinancing your home loan so that you can save on your interest payments. Whatever your situation, it's important to be aware of all of the options out there before deciding on what works best for you.
