Investing in real estate can seem like a smart idea – and a great way to make money. Many people have made their fortunes through real estate. The main question then, is always, how did they do it? Of course, if it was that easy, everyone would be a real estate billionaire. Still, if you are willing to take some risks and follow some tips, you could find yourself a nice little stream of extra income.
Decide on the Budget
Even if you have a lot of resources and capital to commit to this project, it is important to start small. You need to get a feel for the market, for how investing works, to get a sense of your strengths and weaknesses when it comes to negotiating, improving the value of the property, and reselling. To this end, you need to first establish a budget. Determine how much you are willing to invest, keeping in mind this is a risk, and there is no guaranteed return.
Set Your Goals
With a budget in hand, you can start looking at potential investment properties. You can find many properties for sale through a free classifieds webpage or through classifieds in your local newspaper. Think about what kind of market you want to be in. Do you want to be a landlord – renting out property on a monthly or yearly basis, or investing in a property that you think you can sell for a higher price – either as it is, or after investing in some improvements. Both have their benefits and drawbacks, so it is important for you to think about what is best for you, your budget, and your goals.
Research the Area
Ask around and do research on the market in your area. Talk to other property owners and investors, and get their opinion on the market, neighborhoods, and prices. You can also always check free real estate classifieds online to see what are the prices in different areas. It is a good idea to have your first investment properties be near to where you live. You know the area better than anywhere else, and it is good to be close by, whether you are going to engage in renovations, or rent it out to new tenants.
Research the Property
Once you have decided if it is going to be a rental property or a sale property, you need to conduct quite a bit more research. Each involves its own permits, contracts, and other paperwork and hurdles that might not be obvious to the first time investor. Basically, you want to have as much information as possible before you even start looking, as this information will significantly narrow down the properties available to you that fit your needs.
Throughout it all, remember to always keep your eye on the numbers. You are getting into this as a business, so don’t get caught up in anything else. If it looks like the investment is going down, find a way to get out and salvage what you can of the initial capital you put down. Still, do not always go with the cheapest options. A low cost property could end up costing you many times as much in repairs. Do your research, consult experts and those with experience, and make decisions that work with your budget.