Real Estate Investing for Beginners: 5 Things You Need to Know
Investing in real estate is similar to starting a business–you’re putting money into something with the hopes of making a profit down the line. But with that being said, many investors don’t put the same time and effort into researching investment opportunities as they would when starting a new business.
And that’s why many real estate investors won’t maximize their profits.
But if you’re willing to do your research and put the work in before investing in real estate, you can make a ton of money without doing work moving forward.
Keep reading to learn all about real estate investing for beginners, so you can feel confident in your future home investments.
1. Study Price Trends
The key to successfully investing in real estate is finding properties that provide you with a ton of value. For example, if you find affordable properties and you see that the price trends in that neighborhood are skyrocketing, that would be a better investment than properties with a stagnant or declining value.
If you are investing in property in an area that you aren’t familiar with, it’s important to work with real estate management services that can help you find the best investment properties. Spending a little extra money on working with a local business will pay off in the end because you’ll end up with a highly-profitable property.
2. Examine Statistics and Business Trends
Your research doesn’t stop at simply studying price trends. You need to take a closer look and ask why these trends are happening. Oftentimes, you can find statistics such as crime rates and the availability of good schools as an indicator of why prices are increasing or decreasing.
You should also research whether new businesses are opening up and what kind of businesses they are. For example, if there is a brand new shopping center and high-end restaurants replacing run-down businesses, that’s a strong indicator the area is on the rise.
3. Take a Closer Look
There’s only so much you can learn from doing your research online. You can analyze countless statistics and it might look perfect on paper, but you won’t know until you check it out in person. Before looking at specific properties, just take the time to go around the area and see what you find.
Look at who is living in the area and talk to them about why they moved there, especially if they are young professionals. This can give you a more human perspective and will show you what is enticing about the area.
From there, start looking at different properties and consider their location in terms of accessibility to quality schools, grocery stores, restaurants, and nature (beaches, bodies of water, hiking trails). Find a property that offers something unique, something that will make prospective tenants want to live there over other properties.
4. Calculate Expenses and Profits
Once you’ve narrowed your search down, it’s time to talk money. You’ll need to determine what the cost of buying the home will be. Consider the downpayment cost and what type of mortgage you’ll get, and then determine how much rent you’ll charge. If you find that you’ll need to charge a higher-than-average rent in order to make a profit, how will you sell that to prospective tenants?
You’ll also need to consider additional costs such as property maintenance and property vacancies.
5. Minimize Your Involvement
If you aren’t careful, investing in real estate can become a full-time job instead of a passive income. As mentioned above, you’ll have to deal with maintenance issues on a regular basis. Not only is this time-consuming, but it can get expensive. Not to mention if you’re a non-local investor, it’ll be downright impossible.
That’s why it’s important to minimize your involvement by hiring a property management company. They will take care of finding you properties to invest in, property maintenance, finding and screening tenants, property inspections, accounting, preventing tenant disputes, and minimizing vacancies.
With a property management company, you’ll be able to invest in several properties without having to do any of the hands-on work.
Real Estate Investing for Beginners: We Make It Easy
Putting in the time and effort to research a good area and property to invest in may seem daunting. But once you’ve followed these steps on real estate investing for beginners, you’ll be making big profits without much effort.
If you’re looking to invest in real estate in Clearwater, FL, be sure to contact Premis Realty and Investment Services today. Not only can we help you find the perfect investment property, but we will take care of all your property management needs.