3 Tips for Investing in Real Estate
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Owning several pieces of real estate, commercial or residential, and renting them out or “flipping” them can be a relatively decent form of passive income if done correctly. That said, it can be difficult for first time real estate investors to determine if the property they are considering is worth buying to help their bottom line, especially when you see or hear advertisements encouraging you to invest in real estate with “little to no money down”.
Often these ads sound too good to be true and usually it’s because this is not always the best way to begin investing in real estate. If you are considering making your first investment in real estate, here are some tips to consider before you make your first purchase.
Don’t Get Stuck on One Property
A good real estate investor usually views lots of different properties and does extensive research before making a decision to move ahead with purchasing a piece of investment real estate. Unlike what usually happens when you are buying your family home, investing in real estate should have absolutely no emotional aspect.
The decision to buy a piece of real estate should be based solely on hard facts and the how the numbers will work out to help you get ahead financially. This factor is important no matter if you are buying real estate to rent out or to “flip” and resell quickly.
Do Your Research
Before you buy an investment property, you should make sure you are not over- or under-paying for the property you are considering by doing research into how much the property should sell for (based on recent sales of similar properties). After all, your motto in real estate investing should be to “buy low and sell high”.
Doing your research will also help you to avoid over-paying if or when you get involved in a bidding war at a real estate auction. The last thing you want to have happen is that you pay too much for your property, which cuts into profit, because you got caught in the trap of spending more. If you live in a very rural area, or one that just doesn’t have many sales to compare, you might be able to do some research online about real estate on Gumtree to find similar sales in your part of the country. This can help you determine if you are getting a good deal on your investment real estate purchase.
Have an Exit Strategy
No matter how many times you crunch the numbers, you should always have an exit strategy in mind before you make your first real estate investment purchase. You never know what the future may hold and when or why you will need to quickly sell your investment property. Having an exit strategy in mind before you even buy an investment property will help you out in the long-run.
After doing all this research and considering your options carefully, you may find that investing in real estate may, or may not, be the best financial decision for your current situation. But at least you’ll be going into your first real estate investment with your eyes wide open.
Photo courtesy of: ©Depositphotos.com/dmbaker
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