If you’re considering investing in real estate in the new year, we’ve compiled a simple and straighforward list of things to consider during the planning process.
1. Decide what kind of investment is right for you. Do you want to be a landlord, with the potential for steady income month after month? Or do you want to purchase and resell properties at a profit? Both have significant benefits and drawbacks. Landlords have potential for unlimited income over the length of property ownership, but also have to manage and keep up the property, as well as take care of emergencies and tenant questions. Flipping a house often means a larger initial profit, but in one shot.
2. If you’re leaning towards having renters, first time investors might consider buying a single-family home. Single-family units are widely available, but also highly in demand among renters. They are also some of the easiest properties to manage and much easier to manage than multi-family properties.
3. Consider location and condition. Getting an amazing price on a property that’s across town or in a less-than-desirable neighborhood might in mean losing time and money in traveling to the property or not finding a renter or buyer in a reasonable amount of time. A fixer-upper might save you money up front but will cost you in repairs, permit fees and labor. Consider the whole cost when deciding on a property.
4. Consider hiring a property manager. Whether you own a residential or commercial space, a property management offers a valuable service. Property managers advertise rental units, interview and screen potentional tenants, help you determine how much rent to charge and can also collect rent and deposits. Some property managers even help arrange minor repairs and maintenence.
5. New investors should check out some real estate reading. Even investing pros can benefit from reading sound, expert advice. Some books to consider are the ABCs of Real Estate Investing by Ken McElroy and Building Wealth One House At a Time by John Schaub.
6. Remember that your real estate broker is a resource. Your broker should be an expert in investments, commercial and residential rentals, and flipping houses. Work with someone who can answer all your questions and offer advice and guidance.
7. Be patient. Real estate investing always carries risk and the rewards can take time. Lots of articles and books will claim you can make a million dollars in 60 days – while people some might, most won’t. It’s important to do your research and trust the process.
If you have investing questions or are looking for an investment property, make sure to contact us in the coming year!