4 Real Estate Investment Tips
Real estate investments are regarded as the best way to generate wealth. A huge upside to real estate investments and reason for their high regard, is that they will continue to rise in value despite occasional periods in which the economy is sluggish.
For any entrepreneurs looking to invest in real estate for the first time, we’ve forged this list of 4 investment tips as a place to get started.
1 - Set Financial Goals
A thorough analysis of your investment is crucial before buying property. By setting goals and understanding what to expect from your investment, you’re ensuring that every investment you make is a step down the right path. These goals will function as a road-map towards financial independence, and can include multiple pieces.
Commonly, investors will set goals in relation to annual cash flow generated through property, types of property, property location, and number of properties needed to acquire annually. If you need guidance while setting financial goals, we would suggest that you take the initial steps of doing some preliminary research, connecting with experienced investors and meeting with a financial adviser.
2 - Educate Yourself
According to renowned business magnate and investor, Warren Buffett, “Risk comes from not knowing what you’re doing”. There is a lot of truth embedded within those few words, especially as they relate to investments. Great resources such as MrLandlord.com and Biggerpockets.com are just a couple that are available.
Without the proper knowledge. you are working against the odds,as you have no gauge as to what information is good and who has effective advice to give. Additionally, informing yourself and learning from the plethora of resources available today can truly make a good investor into a great investor. You are strongly encouraged to join one or more real estate investment groups, such as REIA or via meetup.com
3 - Complete a Financial Analysis
Everyone is different, and thus need to examine all investment alternatives in order to make decisions that are uniquely financially viable to them. Once a thorough analysis is completed, make sure to remain true to its results by only buying property that matches your terms, and avoiding investments at a higher price. If you are not experienced, then make sure to work with someone who is capable of performing financial, which may be a broker or a real estate appraiser.
The importance of understanding the REAL numbers before closing on property cannot be overstated. Explore last years’ property-tax bills, maintenance records, tax returns, etc. to get a solid idea of REAL expenses and income. Many sellers provide forecasted information which may not be truly accurate and can be quite misleading... hence the importance of real numbers
4 - Don’t Speculate
While investing, it is imperative that you always keep long-term goals and perspective at top of mind. If speculating on short-term gains in appreciation, you will never really know when the market will peak until about 6 months after it happens. Any situation in which you are investing in prudent value plays, the numbers should make complete sense from the outset.
Many newer investors don't realize that the best decisions about investing are to avoid BAD investments more than to make good investments... patience is critical to finding good investments.
The importance of understanding the REAL numbers before closing on property cannot be overstated. Explore last years’ property-tax bills, maintenance records, tax returns, etc. to get a solid idea of REAL expenses and income. Many sellers provide fore casted information which may not be truly accurate and can be quite misleading... hence the importance of real numbers