Investing in Real Estate is not the type of job that you can jump into blindly. In order to be successful with your investments, proper planning is necessary to ensure that you are on the right path to achieving your goals. That said, there are many things that you should consider before making that final decision to become an Investor.
1. Research The Market
Before diving in, it’s important that you make sure that you have properly researched the market and gathered information from reliable sources on what Real Estate Investing really is. Browsing websites that provide information on Real Estate Investing and reading publications on your current market will help to further educate you and provide you with a better understanding of the industry as a whole. Real Estate is a dynamic business, so it is important to always stay aware of the fluctuating market and gather research on the kind of properties you may be interested in.
2. Choose Your Location
Choosing your desired location is a vital part of the planning process. You want to make sure that the location you choose will attract your desired demographic and bring in the most of your return. Basing your decision off of analytical data versus your personal desires will bring you closer to your financial goal, and help you to remain objective throughout the process.
3. Calculate Your Expenses
Investing in Real Estate with little to no money is possible, but the overall goal is to make a profit. In order to make money, you have to spend money. That is why it’s best to figure out a way to make your money work for you: start low cost, diversify, then let the money do it’s job. Finding a good lender is an excellent way to help you manage your finances and calculate your expenses according to the goals you have set.
4. Landlord or Property Manager?
An important decision to make when beginning your Investment journey is figuring out if you are wanting to be the landlord of your properties or if you will hire a Property Manager to play the role instead. Hiring a Property Manager will eliminate direct communication between you and your tenants, and will add a middle man to manage any after-hours obstacles. Hiring a Property Manager will allow them to deal with the hard stuff, but it will take a decent chunk out of your pocket. If you are wanting to be the landlord of your properties, you will be the go-to person to deal with any issues that may appear, and it will be your responsibility to come up with the solutions. Deciding whether or not you are wanting to be the landlord of your properties is an important decision that will need to be made when planning your investments and calculating expenses.
5. Expect the Unexpected
When investing in Real Estate, you should always be prepared for anything. Whether it’s appliances breaking, difficult tenants, or unexpected rain damage that will take a chunk of change out of your pocket. Being prepared for any instance will always benefit you and your tenants. Setting aside a percentage of the rental income you receive is a great way to stay prepared in the event of an emergency, and take away that panic factor that we all know and love.
6. Set Goals
Setting weekly, monthly, and yearly goals are a great way to stay organized and objective as you begin your investment journey. It is important to have a clear vision of what it is you are trying to achieve and what profit margins you are hoping to reach. Ask yourself why you are investing in Real Estate, and what kind of outcome you are hoping for. Include these goals into your plan and refer back to them when needed.
Investing in Real Estate can feel intimidating at the start. With financial risk, picking the right property, and finding the right resources and tools, it is always best to start with high ambitions, but low expectations. Allow enough time to get up and going without expecting instant income, because as we all know, the Real Estate business is ever-changing. If you follow the right steps and plan accordingly, you’ll be sure to end up on the high side of things with happy tenants and a happy wallet.