Real estate investing has recently been gaining in popularity, and if you've been thinking about it, this guide will give you an overview. The goal of any real estate investor is to make money. This means purchasing a property at a good price so you can rent it out or and eventually sell it for a profit.
Like in all real estate, the investing game is always changing. To get ahead, and make money, you'll need to do your homework. Here are a few things you should know:
1) Get Pre-Approved for a Mortgage
Once you get a pre-approval, there are benefits you can take advantage of, and most lenders will lock in an interest rate for you. When it comes to bringing in a serious offer to a seller, having a pre-approved mortgage could get you preferential treatment since you already have financial backing.
2) Your Cash Flow
Cash could be a defining feature of investment property. If you show that you have a strong cash flow, you should be all set, but if your projection is negative, you might need to reallocate money from other areas to improve it. You can start with your investments, your salary or savings.
3) Consider Pricing Trends
Consider the area that you are thinking of making an investment, and study the home pricing in those areas. Investigate to see if prices are on the rise, then compare average homes in near-by towns to see if you can find a deal.
4) Research the Local Schools
Areas with good schools attractive parents with school-aged kids. Most states rank schools based on how well the kids in each district score on tests like English and math. Check out my Market Insider page to get started.
5) Suburban Areas
If the suburban market you're interested in is close to a big city, this could be desirable to those who commute to work but don't want to live a large city. With rent and property value rising, many outlaying areas are becoming popular alternatives and have all the amenities as a city.
6) Future Development
Before you purchase in an area, talk to people living in the neighborhoods you're considering, and the town hall to get information on planned future development. You can also take a drive around town and see what construction is underway. If the area you're considering doesn't have a lot of amenities such as banks and restaurants at the moment, it may be just a few years away. Also keep an eye out for new roads to plan for future growth, hospitals, and shopping centers. If a area is set to expand, you my be able to secure a property at a low price and be able to take advantage of higher rent and appreciation in the future. On the other hand, look out for areas that are always congested with heavy traffic or have overfilled schools.
7) Know What You Need
Know what you're getting into if you are thinking about purchasing a rehab or a rental property. Study it closely to get a good understanding of the condition that it is in before you put in the offer. This way, if you have repairs and upgrades can will be able to make an accurate estimate.
8) Start Small
If you're new to real estate investing, you should always start small. Once you get used to everything that comes along with being an investor, you may want a smaller property to manage. When you get some experience under your belt and have earned enough money, you can expand your business by replacing your property with a bigger and more expensive one, or purchasing an additional property.
Now you can start the exciting journey of real estate investing. If you have any questions about real estate investment, get in touch!