Are you thinking about getting into the real estate world? If so, there are some things you’ll want to know in order to make smart investments and avoid the mistakes of the numerous beginners before you. Keep reading for the top six tips to help you develop effective and lucrative real estate investing habits.
The Top Six Real Estate Investing Tips
Tip One: Location, Location, Location
If you haven’t already heard the phrase “location, location, location,” you have a lot to learn before you start investing in the right properties. Location is the largest driving factor in the perceived wealth of a property, which means it’s all about where it is. In fact, when you take a look at the 500 square foot apartments for thousands of dollars a month in places like Hong Kong and New York, you will start to understand the phenomenon.
If you a piece of real estate has an incredible location but terrible house, that can be fixed. You can always fix up a building; in fact, if you have the funds, you can even tear entire structures down. You can’t pick up and move that piece of land somewhere else. This is why location is the number one thing to focus on regardless of the property or property type.
Tip Two: Do Your Research
You may have a good idea of what sells, but that doesn’t mean you know everything about every market. Take some time to do your research on the area you’re interested in. It pays to become knowledgeable about trends of all types. Some of the most lucrative information to know includes:
- Consumer spending habits
- Average mortgage rates
- Unemployment rates
- Future city plans
When you have pieces of information like the ones we mentioned above, you can gain insight into the type of client to cater to. It also helps you make more informed investing decisions later on. We recommend that you never stop learning, especially once you develop your niche.
Tip Three: Develop Your Niche
It can be tempting, especially when first starting out, to invest in the first deal that comes your way. Even though something may be in your price range doesn’t necessarily mean that you should take a chance on it. Take some time and do your research to develop your niche. It may take a few properties to find out what style you prefer and that’s okay.
By taking the time and having the patience to develop your niche, you’ll have more opportunities. We see real estate investors spreading themselves too thin and too far very often. When you develop a niche, you become more knowledgeable and can ensure that you continue to invest in the right properties in the right locations.
Tip Four: Understand the Risks
You may have all the funds and support you need to start your real estate investing journey, that being said, you never know what can happen in the future. Real estate markets have crashed before, and the economy can fluctuate at the drop of a hat. In order to develop effective real estate habits, you’ll want to understand more than just the rewards involved, but you’ll also want to understand the risks.
Don’t put every last penny you own into a piece of real estate with the intention that you’re going to make your money back or make it back soon. One of the most trying yet addictive parts of real estate investing is the gamble and potential payoff of purchasing the right property at the right time and selling it at an even better time. That doesn’t always happen, and it’s important to understand that and prepare for that no matter how great the market looks at the moment.
Tip Five: Partner Up
The last tip on our list is to partner up with the right people, namely an accountant. An accountant is going to be your best friend when it comes to real estate investing simply because they’re the ones who can save you money while you try to make money. If you don’t know already, taxes can take a significant chunk out of your yearly expenses, and if you want to avoid it, you’ll want to partner up with a reputable accountant.
It is true that an account will have a fee associated with their services. The fee is nothing compared to the money you could be saving. Make sure you do your research and shop around for the right fit for you. It’s not uncommon to ask to speak to past or current clients to gain unbiased feedback on their services.
Tip Six: Build Your Team
One of the best pieces of advice we ever received about real estate investing was to build a network of people around you. Networking is a powerful tool that isn’t just for the standard cubicle worker. When it comes to real estate investing, you’re working with a plethora of people from real estate agents to brokers and even business partners.
The best thing you can do is build a relationship with the people you enjoy working with. Sometimes the most lucrative relationships are built after taking a friendly real estate agent out for coffee. Never underestimate who can assist you in meeting your goals. After all, a little extra help and industry insight never hurt anyone.
By following all six of the tips we discussed above, you’ll be able to develop effective and lucrative real estate investing habits to help you achieve your goals. As you move forward in your journey, remember that it’s always okay to ask for help, which is why building a reliable team around you is so imperative. Be honest and kind in all of your interactions and don’t be afraid to ask for referrals when needed. At the end of the day, all it takes is a little courage and knowledge to make the right decisions. So, what are you waiting for? Get out there, start researching and finding your individual niche.