With real estate investing, you can either be incredibly successful, or you can lose it all. As everybody knows, location, location, location is hugely important, but ensuring you deal with the right type of person is actually even more important. However, the world of real estate is filled with shady characters. These are the ones you see on late night telly, promising you untold riches.
You should look at rental properties like stock markets. Although most of us aren’t stock brokers, we do tend to have an understanding of the system, and we know that we have to spend money to make money. However, there are no guarantees at all that stocks will actually perform well. The same is true for retirement calculators, who simply “guess” when we will die. This means that you could end up broke if your life lasts longer than the estimate that was made.
You also have to make sure that you don’t take too many risks. Although there is always a risk in real estate, some options are higher risk than others. You might want to stay away from fixer uppers, private real estate funds, tenant-in-common options and real estate development. It is highly unlikely that you will ever see a return on these options. A much better idea is to title interesting properties to yourself. These decisions should be made based on research and analysis, as well as due diligence. Next, you need to find a property that doesn’t require a lot of management or time. Avoid short term rental properties like vacation homes or student accommodation, or properties in bad areas for instance. You should look for properties that people with good credit profiles will rent for extended periods. Of course, this also means you have to know how to treat your tenants properly. It is impossible to never have a problem with your property, but so long as you deal with issues quickly, this shouldn’t be anything to really worry about.
If you don’t have a lot of money to put down, you will find that it is easier to invest in rental properties if you are younger. This is due to the fact that banks will generally want you to put at least 20% down on a rental property mortgage. This can be a significant amount, particularly if the property needs repairs as well. However, banks tend to be a bit nicer to younger people. Real estate investing does involve a lot of other things as well. Finding the property is an entire enterprise on its own. If you want to find a property, however, you need to have the time to do a lot of research and you must analyze your options. Plus, you will need to find a representative realtor to help you as well. They will help you to find the best properties for your needs. Once you have your property, you need to learn what it means to be a good landlord, which will also take some time. However, do always remember that it is absolutely worth spending this time.