6 Proven Tips to Get Started with Property Investment
If you’re looking for assets that are both powerful and stable, a real estate property is the way to go. There are so many reasons why we should all consider investing in real estate.
One, it has a barrier against inflation. For example, if home sales are down today, you can wait for the perfect time to sell it – no rush. Two, you can earn without having to sell your property. Think about rental yield. Third, you can leverage your money to grow your investments. Fourth, you don’t really need to have a lot of money to start investing. You always have the option to borrow money and finance your purchase.
Getting acquainted into property investment is not difficult especially now when all the information you need is at the tip of your fingers. It can be a little scary, that’s right. But hopefully, the following tips can help you get started with property investment and set you up for success.
Check your finances.
It can be difficult to determine how much you can afford to shell out from your savings or borrow from the bank when it comes to buying a property. This is entirely dependent on your current income and debt situation. The rule that most people follow is that your mortgage shouldn’t go beyond 25% of your monthly income. This gives you enough capacity to pursue your other financial goals, such as your savings and retirement plans. As long as you have a stable source of income, you can get easily approved and paying your mortgage dues shouldn’t be a big problem. After all, there are reliable, convenient personal loans online, alternative financing, bank loans in case you run out of funds. Work out a budget covering all your expenses and income. This way, you can easily know how much you can set aside for your investment.
Buy in a growth area.
Where you invest has a huge impact on how much profit you can raise. Just because a home looks posh and elegant doesn’t mean you can sell it fast or you can find a tenant willing to pay a high price. You should know how to spot a growth area. One way to do that is to check how the property prices in a particular location or region have moved in the past two to three years. Consider the demographics of people moving into the area as well. Suburbs where the median age is around 35 are a good option because these people are more capable to afford to buy or rent more expensive properties. The location of the property is of prime importance. Downtown LA, Austin Texas, Miami, and Washington D.C. are among the best places to invest in real estate.
Know how much you are willing to risk.
All investments carry risk. But it doesn’t mean you can just splurge into them and let luck guide you. An important step is to to assess how much risk you are willing to take in order to choose the right investment for you. Always consider your goals and your current circumstances. To lessen the risk of failure, take time to equip yourself with the right information and knowledge. The more you know, the better your chances are in succeeding.
Be realistic about your goals.
Set your real estate investment goals in a SMART way (specific, measurable, attainable, realistic, and time-bound). Determine the strategies you will use. Ask yourself whether you prefer to invest in one property and have a steady income or go with a fix and flip strategy. Are you going full-time or will you keep your job? Do you want to get involved in a short-term or long-term investment?
Create a real estate purchase plan.
Buying a property without a clear purchase plan is not only inefficient. It also attracts unnecessary risk. There are several things you need to consider when creating a purchase plan: your finances (how much you can afford), your goals, attitude to risk, your strategy, and your criteria (location, price, land content, physical features of the property, etc.) Always do your research when selecting properties to invest in.
Be informed and stay focused.
The best way to ace the real estate market is to stay informed with the latest trends. Consider taking a real estate course or hiring a real estate advisor. Also, take note that the ROI in real estate business doesn’t come quick. It takes time for you to see your money grows. There will also be a lot of hurdles along the way. The key is to stay focused on your goals.
There you go – six proven tips to get started with property investment. The term ‘real estate’ shouldn’t overwhelm you too much. As long as you plan ahead, assess your risk, buy in a growth area, create a purchase plan, and stay informed and focused all throughout, you are not too far away from success.