Are You a Risk Taker?
When you decide to go into real estate investing, you need to ask yourself – Am I a risk taker? On your investment property expedition, you want to be on the lookout for the money makers.
If you answered ‘yes’ to the question we asked you, then you are ready for investing in real estate. Here, we give you a number of low risk investments in real estate, your choice of a low risk investment strategy, and even how to manage to invest in real estate with low risk. We have a whole pot of ‘low risk’ on the stove, let’s start cooking.
Build Yourself a Low Risk Investment Property Portfolio
We all know how important it is to have the best investment portfolio out there! What does it take to build a low risk investment property portfolio you can be proud of? Let’s chat some more.
Look for the Low Risk Areas
No, this does not mean you have to keep it safe and only save and invest in the hot areas of capital cities. On the contrary, the rural area of states is known to be the more affordable option and shows some promising success. This low risk investment strategy has outdone capital city performance in many cases. These low risk areas have shown better growth, potential, and stronger return on investment rates in the last couple of years.
Want to know what I’m thinking? Selecting a rural area with a diverse economic base and not just one single dominant industry may lower the risk of your real estate investment. A more diverse economy means less “major” factors taking a hit at your real estate investment property success. Large rural areas are a much lower risk than a “one horse town.”
Get the Geographical Diversity Juices Flowing
It’s common for real estate investors to buy investment properties in their hometown, city, and state. Why? Due to the common misconception of the extremely high risk of buying out of state. However, this is far from true. There is just as much risk investing in the real estate of your home state as there is anywhere else.
Markets can crash, the economy can decline, and real estate investments have the risk of failing just like anywhere else. Will that stop you from making the investment? The more diverse your investment property location, the more you minimize the risk of being exposed by different market cycles. You will find that it’s riskier to put all those investment property eggs of yours in the same basket.
Still feeling uneasy about investing in a real estate market that is foreign to you? No need to fear, Mashvisor is here. Seriously. This platform has a number of tricks up its sleeve. Let’s say you are planning to invest in a neighborhood you have never invested in before. Mashvisor can provide you with a neighborhood analysis, giving you the 411 of the area of your choice.
Real estate performance metrics like cash on cash return, cap rate, and Airbnb occupancy rates can all be available to you within the click of a button. Want to figure out what the best investment strategy is? Mashvisor can give you an idea of whether Airbnb or the traditional investment property route is the way to go.
To find out more of what tricks Mashvisor has up its sleeve, click here.
Having an investment property outside of your comfort zone is more than possible. You may even find more success in an investment property outside of your real estate market. With Mashvisor, the job can be easier, so why take the hard route?
Look for Investment Property Growth Indicators
Find yourself a low risk real estate investment property by securing your cash by investing for passive income. Keep your eye open for the drivers of growth in the area of your choice, as it will seriously reduce your risk of having an underperforming portfolio. Due diligence is key here, as you need to find a growing investment property that fits the criteria. This criterion includes:
- a growing population
- infrastructure projects that could get the cash flowing
- high employment rates
- a diverse economy
- “undersupply” of available housing accommodation (low supply and high demand put your investment property in business)
Buying an investment property in growing areas introduces the potential of a higher rental yield and a positively geared property. Both of which are every part of your real estate investor dream of a prospering investment property.
Go Old or Go New?
When you’re out buying an investment property, you need to ask yourself if you are looking for a new or an old property. One way to mitigate real estate investment risks is to actually go new. This is a step that needs some serious thinking and strategic planning, so don’t dive right in without understanding what you’re getting into.
Part of reducing your real estate investment risk is by minimizing the holding costs of your investment property as well. These things go hand in hand. Buying an older investment property comes with its risks. This could be the risk of high maintenance expenses or unexpected investment property costs that can make you say “goodbye” to your cash flow.
It’s no surprise to see that real estate investors look to selling the investment property due to their inability to afford high holding costs. We are all about taking risks, but you should plan accordingly for this type of investment property.
Related: How to Find Low Risk Investments When Buying Rental Property
This is where the low risk investment options come in. Buying a new investment property can mean reducing the risk of those cash flow blowouts you are trying to avoid. How? There are warranties from the builders themselves and on the appliances in the investment property for many years. Don’t forget about the benefits you can expect with claiming depreciation on your new investment property (for a whole 40 years).
This gives you a boost in cash flow and even takes away some of the stress of holding more than one investment property. It’s a good feeling to know both Uncle Sam and your tenants are paying for your investment property and putting a little something in your pocket as well.
Get a Hold of Various Types of Properties
Low risk investing involves getting diverse with your investment properties. This is one of the smartest ways to go when it comes to lowering your risk of investing. Owning houses, apartments, townhouses, or vacation home rentals all increase your chances of meeting the demands of future buyers and renters. The more choices you provide, the more you are widening your pool of customers. Of course, a good amount of real estate market research goes into this strategy, but it is more than able to work.
Related: Real Estate Crash Course: Rental Market Analysis
This trend is especially successful with the properties that are geared towards smaller, eco-friendly, and energy efficient homes. Lower maintenance and energy bills are two growing wants of tenants. You will find that the demand on your investment property will be growing more and more. This could be one of the best low risk investments you have ever pursued.
Quick Tips for Your Low Risk Investment Expedition
We want to give you some real estate investment strategies and tips that will get you one step closer to low risk investing. Here they are:
Use the Lease to Own Homes Option
When you choose the lease to own homes option, you are able to make the commitment of buying an investment property with almost no money down. Not to mention getting an extended period of time to get your financing options in order.
Be a Flipper
Yes, a flipper. Flipping real estate is one of the loves of real estate investors. This investment strategy allows you to get your cash flowing by finding those motivated sellers who need to sell fast! These sellers are normally willing to sell for a much lower price than the actual house market value. You can then “flip” your contract to a new buyer who will be more than likely to pay much more than what you agreed to put down. The majority of the time, you will never put a penny at risk.
Get Informed
You don’t need a Ph.D. to be a real estate investor, but you need to play it smart. The last thing we need you to do is nose dive into the water with an unknown depth. Get yourself educated. No, this does not mean go to college and get a degree in real estate but instead get your research juices going. Get the basis of low risk investing down, that way you are able to make your money moves.
Check out Mashvisor’s free eBook for some of that real estate education. Click here for access!
Related: Owning the Most Profitable Investments in 2018: Real Estate: Education vs. Experience
Do You Consider Real Estate a Low Risk Investment?
This question can have two answers: Yes or No. Depending on your real estate investment expertise, you can manage to maintain a low risk real estate investment property portfolio with ease. Mashvisor is always willing to make your job easier, so don’t hesitate to use us (chances are we can lend you a helping hand). Get your affairs in order, read up, and go out there and find your investment property. Low risk investing is within reach, so grab it.