Investing in Real Estate demands that you are prepared in many ways, you have to be financially, emotionally and physically ready to take that leap.
Financial Preparedness
Assuming you aren't purchasing a property outright you will need to ensure that your credit is top notch especially with the tight lending restrictions we are seeing since the housing market crash. You also need to understand the commitment and costs associated with investing in real estate. Most real estate investment strategies tie up money for quite some time so it is important to understand that and either choose to commit for the long haul, find a property you can flip, or commit to a different investment vehicle altogether. Understanding cash flow and how to realistically value a property is so crucial to making wise choices when hunting for a great deal. Last but not least you need to have your team of trusted real estate professionals in place to help guide you through the process. This team would consist of at a minimum a mortgage lender, attorney, CPA, and financial adviser.
Emotional Preparedness
Yes, investing in Real Estate absolutely has an emotional component. Taking the leap on that first investment property is difficult, it's very stressful to put a large some of money on the line when there are so many unknowns. The house could end up needing extensive work, the market could crash, you may not be able to find renters, and what if you paid to much. All of these factors can send someone into full on panic mode. However, If you're prepared and willing to take a bit of a risk and move quickly you could score big. If you've crunched the numbers, allowing for some unknown expenses and the property has sufficient cash flow then you can check that off your worry list. If you've taken the time to learn about the neighborhoods you are interested in investing in you become familiar with the rent history and rentability of the area. Seeking the advice of more experienced colleagues, advisers, investors, realtors, etc. is always a great idea and can help you become emotionally prepared. Just remember he great real estate deals do not stay on the market for long. Other investors that may be more prepared are ready and waiting to swoop in and get first dibs.
Physical Preparedness
Being physically prepared involves a different segment of your team of real estate professionals than the ones used to become financially and emotionally prepared. This part of your team includes; property managers, general contractors, a handyman etc. as well as maybe your own ability to swing a hammer and make some repairs yourself. So maybe you don't want to do any of the work on your real estate investment, that is fine, but I do think that it is wise to become familiar with the costs, methods, and components needed to make repairs so that you can make an educated decision about repair needs.
So be prepared and good luck to all of you on your real estate ventures!
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Dulcey is a member of Rentec Direct who provides Property Management Software, tenant ach payment processing, tenant credit check, and criminal reports for property managers and landlords. The information in this post is just that, informational and should not be used as a substitute for legal advice.
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