An unplanned initiative can always be daunting. Same is the case when you are looking to get into the investment market, for the first time. So, if you are thinking to invest, how would you buy your first investment property? Guys, start immediately with an investment plan.
Everyone seems to know it: Real estate investing can do wonders for your financial future! You can certainly get stellar returns. However, the key to get great returns lies in understanding the basics of what makes a great real estate investment.
Here are a few important considerations to think about that will help you sort through the clutter before you buy your first property.
#1 Are You Ready to Invest?
Investing in real estate is not for everyone. And even it isn’t very easy. Only you can know if you are ready to start investing. So, analyze your life and see if real estate can fit into your investment portfolio. Learn as much as you can about the real estate and investments. Read real estate blogs, websites, and forums to get a firm grip on just what real estate investing is and to use it to build wealth. You can also ask for suggestion from some successful wealthy investors around you.
#2 What Property to invest in?
Real estate investing is an exciting field; you get many different strategies to customize your plan to fit your personality and position in life. Find and choose the one that suits your lifestyle.
Here are some tips about what kind of property you should buy:
- Well-maintained homes – The investment of time, energy, and money to bring fixer-uppers into good condition hardly gets a good ROI on them.
- Avoid extravagant, expensive homes – The more a house cost, the lower the net rental income you get comparatively.
- Buy as personal residences, and change to rentals – Buy a property for personal use first as owner-occupant gets the best financing. By living in the house you’ll get to know what needs to be improved before you sell it.
#3 Do you know all Investment Expenses?
As a first-time investor, don’t underestimate your expenses. They are not limited to just buying the property. There are numerous other expenses you need to account for, including repairs, legal fees, utilities, accounting, evictions, capital improvements, maintenance, fuel, and several others.
Here you should know about the “50% rule” of thumb. It helps you in determining how much you should plan on spending for expenses. It states that, if a property rents for $2,000 per month, you can assume $1000 in expenses per month before paying the mortgage payment.
#4 How Will You Finance Your Property?
Cash is the best way to finance for your property, you need not to deal with banks or loans. But, if you don’t have all the cash needed, you can supply the down payment and take out a mortgage to cover the remaining cost. Whereas, if you opt for taking loan, go through its term and interest rate well.
#5 Do You Have an Exit Strategy?
Start with the end in mind. Know what you are going to do with the property before buying it. Make sure you do not face any problem due to sudden market drop and you lose your property and money both.
Always have multiple plans for your investment. Know what exit strategies are available for you, and plan, from the start till the exit.
Hope you enjoyed reading the post. If you need more information then contact Savitry Greens.