Investing in real estate meanings putting the money you have today to work for tomorrow. Simply put, real estate is a business that requires a healthy dose of foreknowledge, confidence in your research, and skill in assessing the lucrative real estate markets of today and tomorrow. The revenue you make on your return must be enough to cover things like taxes and the cost of owning real estate investments like paying for utilities, maintenance, and insurance.
Basically, real estate is the real world equivalent to monopoly. But just because the concept is easy to grasp doesn’t mean that the industry is easy to excel in. Below are a few helpful tips for those who are novices in real estate investing.
Deciphering the best cities and bustling towns to start investing in real estate is crucial. If you can develop the foreknowledge it takes to scope out lucrative areas, then you are already off to the best possible start. An old real estate investing adage is to look for the worst house on the best street. Why? Well, a good location provides strong potential for tourism, and “fixer-upper” property allows you to buy low, invest your money into renovating and upgrading, and then sell for a price that reflects your renovations.
The 1% Rule
If you plan on purchasing a property that you’ll rent out to one or more tenants, then you should utilize the 1% rule.
The 1% Rule states that an income producing property must produce 1% of the price it costs you every month. For example, if you buy a property for $150,000, then the monthly rental income should be 150,000 x 1% = $1,500. Simple enough, right? Well, the true skill in this area comes from searching out and capitalizing on properties that are conducive to the 1% rule.
Appreciation is when the land and market around you goes up due to an outside factor in the community. A major new shopping mall, city upgrades, and even the investments you put into your properties that make it more appealing to potential buyers all help produce appreciation. While extremely lucrative, this is one of the riskiest elements of real estate investing, and caution should be taken when playing the tricky game of real estate appreciation.
Real estate investing is a great industry to enter into, and simple as it may be in its description, the application of it is something that requires skill and precision. However, difficult as it can be, implementing these three steps will prove to be extremely useful for you in the long run.
Attempting to dominate the ever-evolving nature of real estate, single-handedly, is as illogical as it is unnecessary. With the passel of agents, forums, and news outlets who’ve flocked to the Internet to impart their wisdom, staying ahead of the real estate trend is a breeze. Among the most beneficial online real estate resources include:
Real Estate Marketing Machine
Spearheaded by Chief Marketing Officer, Lisa Klinkhammer, Real Estate Marketing Machine underscores the importance of fusing agent expertise with marketing knowledge. The underlying purpose of their content is to delve into the intricacies of marketing, allowing agents to hone their skills and “grow their business in a digital age.”
Focused on tackling the vast complexities of technology, GeekEstate Blog illustrates how to make modern-day advancements a friend, not foe. No doubt a nod to their astute knowledge in machinery, the “geeks” who run this blog are well-versed in evolving technology trends.
This all-encompassing forum touches on relevant real estate events. Delivering “accurate, innovative, and timely information about the business,” Inman has universal appeal. From up-and-coming technology articles to proactive stances on foreboding topics, Inman covers all things real estate.
Primarily inspired by real-life stories, Redfin is committed to providing subjects of topical interest. Using real estate professionals to validate their findings, Redfin unveils examples of real estate in its purest form.
Designed to combat the stagnancy associated with outdated education, McKissock offers a raft of educational resources. From helpful tips to legitimate how-to’s, McKissock provides a viable outlet for agents who are looking to polish their real estate knowledge.
Allowing readers to express their varying standpoints, Housing Wire takes real estate market trends and feeds them to the public. While “open commentary” is their shtick, Housing Wire volunteers their advice on pressing matters as well.
Real Estate Tomato
The blog that inspires blog, Real Estate Tomato is a platform that promotes the use of real estate blogs. Their articles broach blog ideas and strategies, fostering blog startups from infancy to execution. Well-versed in the blog realm themselves, Real Estate Tomato’s advice is nothing short of authentic.
Miller Samuel Inc.
Incorporating a unique facet to their forum, Miller Samuel Inc’s inclusion of podcasts give them an undeniable edge. Offering auditory learning and fresh perspectives, author Jonathan Miller provides a blog second to none.
Across the country, real estate prices are continuing to increase. In an effort to increase income and financial freedom, people are poking an interest in real estate investing. Some of these real estate investment markets are growing at a more rapid pace than others. In such areas, competition for locking down a property is higher than ever before.
Nashville quickly became one of the most popular cities in the country to visit this year. Not only are entertainment options plentiful, but the economy is also booming. Many people are excited about the economic growth taking place in the city, which is causing an increase in demand for property. The state of Tennessee has no income tax, which is another appeal for investors.
Nashville has obtained an abundance of companies who have chosen to relocated their facilities. This is increasing the number of jobs available to workers in the city, which ultimately causes a larger need for housing. Nashville is a great place to purchase real estate and people are noticing. Real estate investors are starting to flip homes for a profit. Before buying a home in this area, make sure to conduct proper research in the field. This is the best way to find a property that meets your needs.
Another booming real estate market is in San Francisco. Over the past few years, thousands of people have moved to the area in search of tech-related jobs and a relaxed lifestyle. This has caused the housing market to skyrocket and as an investor, getting in on the ground floor was crucial. Another factor contributing to increasing housing prices is the foreign investment in real estate. In San Francisco, it is not uncommon to see one home get dozens of offers within minutes of it hitting the market. Now is one of the best times to sell a property for the first time in a long time. Investors know this and are often willing to pay higher rates for a property.
Denver has been a hot housing market for a few years now. Not only is this area growing, but new companies are choosing Denver as their headquarters. As a frontier for the cannabis industry, Colorado cities are making people consider a move to the state. There were times when Colorado was seeing little to no population growth. So these past few years have been an exciting time for the state Today, Denver is one of the hottest housing markets in the country. If you want to invest in real estate in this city, you need to work with a local real estate agent who knows the area.
For many people, real estate investing is a great way to achieve financial independence. However, real estate investing is a difficult process. There are various people who struggle to get started with investing.
In addition, there are many ways to make mistakes with real estate investing. Too many mistakes can result in financial failure. Here are some of the most lethal real estate investing mistakes that you should avoid.
Borrowing Too Much Money
Perhaps the biggest mistake that new investors make is to borrow too much money in the beginning. When you first start investing, you are often really excited to buy your first property. Borrowing too much money does a couple of things to your finances.
Not only will borrowing too much money impact your monthly cash flow, but it also increases the risk that you have in business. Some people struggle to pay for all of the debt that they take on.
Lowering Your Rent
Some real estate investors believe that lowering their required rent is the best way to attract quality tenants. However, having rent prices that are too low is the wrong approach to take as an investor.
As a real estate owner, there are various expenses that you must deal with. Rent payments help the owner pay for repairs and other maintenance in the home. Make sure to conduct thorough research on the area before setting a price for your monthly rental requirements.
Maintenance is one of the most important aspects of owning a home. There are many people who want to avoid maintenance expenses whenever possible. However, this is the wrong approach to take for a variety of reasons. Maintenance expenses are much cheaper than repairing a major problem.
You should conduct thorough maintenance in your home whenever possible. This is the best way to avoid major issues later on.
Selling in a Panic
If the housing market starts to drop, one of the worst things that investors can do is sell in a panic. Trying to sell a home quickly is only going to reduce the total price that you can get. Instead, focus on ways to hold your home through an economic downturn. This is the best way to enjoy price appreciation when the market picks up again.
Overall, real estate investing is a great way to build wealth and change your financial future. Avoiding major mistakes is essential to achieving financial success.