Said in simpler terms, the primary purpose of investing in real estate isn’t to receive profits as soon as possible, but rather to put money down so that it can lead to a decent return on investment further down the line. The amount of profit that you make from a sale should be enough to cover the expenses of owning said property such as insurance, taxes, and maintenance expenses.
At first glance, the act of investing in real estate may seem as simple as the board game Monopoly. But the reality is that it is filled with pitfalls that can lead to bankruptcy in a short amount of time. Here are some tips to consider when it comes to investing in real estate as a beginner.
1) Hire a Real Estate Lawyer
There’s a lot of fine print associated with acquiring a property as well as legal pitfalls you need to avoid. Real estate lawyers can make complicated aspects of investing much more clear. For instance, chances are you may not know every rule or regulation you need to follow to legally acquire a property. A real estate lawyer can help to provide clarity to these dark areas so that you can make an informed and profitable purchase. Some of the things a real estate lawyer Indianapolis can help you with include:
- Zoning issues
- Transfer of deeds
- Mortgage fraud
- Evaluating if a property has a lien or restrictive covenant
2) Start Small With a Single Family Home
As you venture into the real estate market, you may be unsure about the type of property you should acquire as a first-time buyer. Most experts agree that a single-family home is a perfect choice as your first property. Simply said, unlike multifamily homes or apartment complexes which come with their own set of rules you have to abide by, a single-family home is the easiest way to get experience in the business. They are also regarded as being highly reliable and easier to maintain than a large apartment complex, for example.
3) Become Aware of Financing Options
One of the most troublesome areas most beginners struggle with is financing their first property. But, there are two primary things you need to be aware of that can help you:
- Learning about traditional and non-traditional financing options in your state
- Ensuring that you have good to excellent credit before you finance said property
While traditional bank loans are the most common type of financing option real estate investors choose, you should also consider other options such as real estate syndication, owner financing, and hard money loans.
4) Location, Location, Location
While you may assume that investing in a property starts with the price of the property itself, it actually isn’t. It actually starts with selecting the right location first. For instance, it doesn’t matter if you acquired a property at a good deal if no one wants to live in the area surrounding said property, such as one that’s filled with theft or vandalism.
By networking with experienced investors, you will get an idea of the cities that have a thriving market. Most experienced investors know where the best locations are right down to specific neighborhoods. The key thing to remember is that you shouldn’t just rely on a guide as the real estate market is always changing. Experts will be more in tune with what’s trending now and where the best locations are for now and the foreseeable future.
5) Learn, Learn, and Learn Some More
A list of real estate investment tips for beginners would not be complete without highlighting the fact that you should read as much as you can about purchasing, owning, and maintaining an investment property.
The abundance of information that can be found may seem overwhelming at first. Therefore, as you start out you should focus on learning the basics of making a good return on investment. One of the biggest mistakes newcomers make is that they believe they can learn all from one course or from a week of rigorous reading. But, as successful real estate investors will tell you, similarly to a doctor, you have to continuously be open to learning new things, such as a shift in trends in the market.
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