Facts To Know Before Entering Real Estate Investment
It is everywhere on TV, in newspapers and everyone knows that Real Estate investment can do wonders for your financial Corpus. However, just because investing in real estate has a reputation of bringing in stellar returns and building massive wealth doesn’t mean that all the investment that it creates are equal.
Starting Real Estate Investment
Below are some fundamental considerations that you need to keep in mind before venturing out to buy your first investment property.
Can you invest: Not everyone can invest in real estate. You need to have a firm grasp on your finances before making an investment. It may not help you to get rich in a twitch but it is like an adventure that may span. You need to reflect a lot, educate yourself whether or not real estate can fit into your investment portfolio.
Have you planned anything: You need to have a definite plan and perhaps the lack of plan is the reason why many investors lose money be it stocks, mutual funds, business or real estate. A plan helps you transit from where you are right now to the place you want to reach.
Where to Invest: There are hundreds of ways to make an investment in real estate, so you need to find a strategy best fitting your style and risk appetite. Location of the property is important while choosing a real estate investment. You need not necessarily buy property in the most expensive areas but what is important is that you understand what the location is like and whether or not it fits your plan.
Local Vacancy Rates: Vacancy is the most costly expenses you are likely to face as a real estate investor. Vacancy is a normal part of life of an investor therefore you should be fully prepared for. You need to determine the average vacancy rate in the area where you propose to buy and seek to minimize the vacancies by understanding the local average market rent and attempt to be just a little below average.
Know Your Investment Expenses: if you underestimate your expenses then you are committing a big mistake. There are numerous other expenses apart from repairs, like utilities, evictions, maintenance, other supplies, capital improvements, etc.
Financing your Property: You can pay in all cash or you can opt for loans to cover the costs. While using loans be aware of interest and term and stay away from adjustable rate mortgages.
Self management vs. Hire a professional Manager: A property manager costs between 7 to 10% of monthly rent but helps in decrease vacancy and makes repairs economical. Don’t be indecisive, plan and budget astutely.
Can you book-keep: paper work involved here is not easy it requires efficient management. And if you’re confident in your abilities to book-keep that is excellent otherwise you need to budget for a professional to keep an account.
Always Keep an Exit Strategy: you should always start with the end in the mind and always have multiple plans for your investment and know exactly how you plan to make money with the investment.
Recommended Read :
- What is Real Estate Investing?
- Basics of Real Estate Investing
- Secrets of Making Money in Real Estate
- Future of Real Estate Investment in India
- What is Real Estate Bubble?
- Real Estate Vs Mutual Fund
- Risks Involved in Real Estate Investment
- What is a Commercial Property?
- What is a Residential Property?
- How Interest Rates Affect Real Estate Business?
- What is Vacancy Rate?