At the very beginning, the “investing” is mostly going to consist of research the market, getting to know all the players, and gathering as much info as possible.
Paying off the loan
If you are entering the real estate business with heaps of cash, that’s great. However, Catch 22 teaches us that usually, people who wish to earn money enter the real estate business. As a result, expect high competition from other realtors but you needn’t worry if you secure the flow of cash.
Hardly anyone pays the full price of a home and the subsequent repairs in cash and on the spot. A more common strategy is to get a bank loan and then pay it off month after month. However, the interest rates will not go in your favor so implement the strategy of renting out the real estate to cover the cost of the bank loan. Furthermore, tenants will cover the utility bills, meaning that you will break even and possibly make a small profit in the process.
Be prepared to cash the downpayment
When purchasing a flat or a house, the bank will require you to give a couple of thousands of dollars in advance. However, if you’re buying the property directly from the owner without taking out a bank loan, then be prepared to cover the downpayment.
On average, this will amount to 20% of the total real estate value. The problem with the downpayment is that owners like to see you count the bill, as a cash payment on the stop is a sure sign for them that you are solvent.
Interest rates fluctuate
As the United States is considering introducing negative interest rates for savings accounts, the future is bleak for bank loans. Financial institutions try to draft clear contracts but there are always small print letters that tie the interest rate of your load to a variable of some sort.
The result is fluctuating interest rates that will make it hard to track how much money you still owe to the bank. That’s why you need to stay up to date with the financial market, tracking any changes in your interest rates and reaching immediately if they inexplicably soar.
Be smart when choosing the real state to invest in
A cozy but dilapidated house in the suburbs might sound like the perfect investment opportunity. However, it might turn out that repairing it and turning it into a home will cost too much money and you’ll end up in the red. In order to prevent such a scenario from occurring, consider hiring property investment agents who will help you out at first. In the real estate business, a keen eye for investment comes after years in the trade.
Forget about flipping a home fast
With experience comes to speed, as only top real estate agents are able to flip a home in a matter of days or weeks. As a beginner, you should stay clear of such transactions because you might end up destroying your investment career before it even began.
The thing is, in order to flip a real estate fast, you need to be close with both the seller and more importantly, the buyer who trusts you enough to cash a large amount on the spot and in days. Until you establish connections in the industry, don’t dabble with flipping or homes.
Aim low
One of the most important strategies you should adopt early on is aiming to purchase a real estate that is low in price. These are not going to be spruced out homes but you can make the investment worthwhile with a couple of home improvements.
This is a great test for you to see how much you can get out of a real estate after the decorators finish their job. Don’t hope for huge margins in the beginning, as breaking even on the first two jobs is still considered success.
The location sells
Speaking of the right property, more often than not you’ll look at the location of the real estate more than the condition it is in. A leaky roof can be repaired but you cannot move the house closer to the main road or a school.
Factors like low property taxes, medical services nearby, entertainment, a neighborhood with a low crime rate, and the vicinity of job opportunities all influence the final market price. In fact, these factors jointly referred to as the “location,” have the potential to raise the price more than luxury features of the house or flat.
These 7 smart real estate investment strategies are ideal for beginners to learn the ropes. You can turn a hefty profit dealing with real estate but you need to form an investment strategy that will set you apart from the competition. If you can gain the trust of buyers and sellers alike, then you are looking at a bright future in the real estate business.
Contributed by:
Sarah Jessica Smith is a young blogger from Sydney. She is in love with life and all the things that can make her daily routine easier. She loves to write about home improvement, lifestyle, and all the small things that make life such a great adventure.
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