The housing market this year is looking healthy and upbeat and if you are contemplating whether or not to invest in real estate, do it now or forever hold your peace.
Joking aside, this is a great time to buy real estate properties and make lots of money. If you are a novice real estate investor, however, beware of the logistics and due diligence involved in the process. If you want to laugh all the way to the bank, do not be hasty – do your research and get professional real estate investing help or advice. Buying rental property or selling one at a good price takes much time and extensive research. But before you get started in real estate investing and achieve financial success, we give you the best 9 real estate investing tips you need to know before you kick start your real estate venture.
Best Real Estate Investing Tips
1. Location, location, location
Location, location, location is by far the most important tip of all and should be amongst the best real estate investing tips ingrained in your brain. It is no secret, the location or area of your rental property affects the overall value in the long run and plays a role in enhancing or diminishing your real estate property’s worth. If you are looking for a house to invest in, make sure you pay attention to its location and nearby amenities and facilities. Thriving cities like Florida are booming housing markets because these areas are in high demand and everyone is vying to buy real estate there. Highly developed cities and safe neighborhoods make for a great real estate investment opportunity. Do not be fooled into buying an investment property in a far-fetched or unsafe neighborhood just because it is relatively cheap. Pay as much as required in order to invest in prime locations to reap financial rewards for the long haul. The best real estate investing tips begin with location.
2. Fish for wholesale properties
Similar to the fix and flip model, look for great deals that are priced under market value. How? Savvy investors fish for wholesale real estate properties that are priced at a steep discount. You buy a house at a great deal and revamp it to make it worth twice the selling price. Win-win! Be on the lookout for those houses that are underestimated and undervalued, but could make you significant profit to outweigh your costs. But just a small tip, do not forget to have a professional inspector assess the state of the real estate property and estimate the expenses you will incur. Beware of buying a house that might break the bank if it costs too much to fix and renovate. Maximizing the returns on your investments is the reason why so many people are attracted to real estate investing. Long story short, fishing for undervalued properties is one of the best real estate investing tips to keep in mind.
3. Know your tax benefits
Owning a rental property is a business, ladies and gents, so make sure you know the tax benefits and deductions involved in real estate investing. There are many tax advantages to real estate investments which should give you another incentive to go ahead and buy your first rental property. Real estate is a business and you are bound to incur expenses you can surely deduct. This is the reason why the tax benefits you earn made its way on the list of the 10 best real estate investing tips worthy to note.
Some common tax deductions include but are not limited to:
- Mortgage expenses
- Travel expenses
- Repairs
- Depreciation
- Insurance
4. Up your credit score
This is a no brainer! Make sure your credit score is in check in order to qualify for a mortgage loan. You are most likely going to need to borrow money to buy real estate properties. Be proactive to improve your credit report and count it as one of the best real estate investing tips you need in order to succeed in the real estate business.
5. 1% golden rule
One of the best real estate investing tips to keep in mind is the 1% rule: simply put, a rental property must make 1% of the price you pay for it every month. For example, if you buy an investment property for $200,000, then the monthly rental income should be $2,000 (200,000 x 0.01). Pretty straight forward, no? Make sure your rental property of choice is worth the selling price in the long term.
6. Stay updated
Another no brainer! We cannot stress enough the importance of keeping up to date with the economic trends and housing market condition. How do you expect to buy or sell real estate properties without having a clue if it is a seller’s or a buyer’s market?! Grasp important real estate concepts and stay informed on the state of the housing market in the country as much as possible. When you are well informed, you make smarter decisions and hopefully see financial rewards in turn. Keeping up with the real estate market and the overall economic conditions is one of the best real estate investing tips we can give you today.
7. A tip for sellers
To entice more buyers, enhance the appearance of your home by doing the following:
- Instead of renovating the whole house, do light makeovers everywhere to cost you less money and still be as effective.
- Clean your house and make it spotless.
- Declutter and show the space, not the content.
- Repaint and add brighter light bulbs.
8. A tip for buyers
In a nutshell, don’t count on a closed deal or a verbal agreement from an agent until you sign the contract.
9. Hire the right real estate agent
And last but not least, hiring the right real estate agent is one the best real estate investing tips worthy of mention. Do extensive research and interview as many real estate agents as possible, ask around for referrals, and do not be shy to ask questions. You are paying money to get this service, so better do it right.
It is no secret that real estate investing is a great opportunity for anyone looking for a way to make money and save up for retirement. Become your own expert and know your real estate inside out; that way you can guarantee profitable investments and a healthier, more diversified real estate investment portfolio. You too can become a successful real estate investor and be your own boss. Say bye to your boring 9-5 job, because with real estate, you no longer need to work for anyone else but yourself.
Check out Mashvisor for the best real estate investing tips and tricks to make you a successful investor today!