Attention Real Estate Investors.
So you want to invest in real estate, but you haven’t yet. Sure you can invest in stocks and bonds, yes you can park your money in the bank and watch it grow slowly, or you can invest in real estate. Take it from me- I purchased my first investment property back in 1990, and to this day I am so thankful I invested in real estate. Over the years, I’ve learned that real estate investment is a great way to expand your wealth. Although, you can’t blindly invest in real estate and expect to grow your wealth. It is important to have a firm grasp and understanding before you invest in real estate. Here are a few tips to help make sure you get your money invested properly.
There are many ways to invest in real estate, but I want to talk about one of the most common forms of real estate investing which is purchasing an investment property and then earning money from rent paid by tenants. Keep in mind, this is not a get rich quick scheme, rather, it’s a great way to build up wealth over time.
Before you invest a dime, you have to analyze your finances. When investing in real estate- you don’t want to spread yourself too thin. Investing in real estate requires capital beyond the amount of the investment. Even if you paid all cash and you have no mortgage, owning real estate requires maintenance and upkeep which will normally be covered by tenants paying rent. Although, there may be times when there are vacancies (and or) delinquencies, and you as the owner will have to cover the costs.
I don’t care what you invest in, but especially when it comes to investing in real estate- you have to recognize “is this a good deal.” As simple as it sounds, one of the biggest problems for first-time investors is they don’t know how to recognize a good deal. And unfortunately for first-time investors, recognizing “a good deal” takes education, research, and experience.
When determining a good deal, there are many factors to consider. Cash flow, the strength of the local market, and class of building are three major considerations in finding a good deal. As far as cash flow goes- you want to make sure there’s more money coming in than going out. But sometimes the cash flow is not so straightforward, and that’s where knowing the strength of the local market (vacancies and delinquencies) are important. It is also important to understand the class of building (A, B, C, D.) When you buy an A or B building, you should have less turnover than a C or D building. Also, A or B buildings will generally require higher maintenance and repairs than C or D buildings.
As you can see- there’s a lot to know when it comes to investing in real estate. My hope is that this blog post gives you some good insight to some of the things it takes to invest properly in real estate. As you can imagine- there’s a lot to understand and know about before you invest in real estate. If you have any questions about this article (and or) if you want to know more about investing in real estate you can call me at 562 225-2296 or email at jmkinfo66@gmail.com
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