Real Estate Property Investment 101

Real estate property investment is still considered to be one of the best and safest long-term investment options available – if you know what you’re doing.  It’s time for some MoneyAhoy.com real estate property investment 101!

People who choose to buy a property and then turn around and rent it right away, or live in the property and sell it after they have remodeled the property, stand to make a fat profit. It is good for a first time investor to get some property investment advice to help them make a good real estate investment decision. The following are some basic guidelines to follow:

Real Estate Property Investment 101 – What’s Your Bankroll?

First, it is good for a person to know how much money they have to invest with in the first place. Many people prefer to get a pre-approved loan from a bank before they start.  If you have saved up a large bankroll, that is always another option.  People coming to the negotiating table with cash seem to get better deals.  Having an idea of your investment budget will ensure you keep a focused approach when evaluating properties.

Real Estate Property Investment 101 – What’s the Monthly Upkeep?

Next, a person needs to make sure they know how much money the property they’re going to purchase will actually cost. This means knowing the insurance rates for owning the property, how much money is going to be required to do general repairs, and having something set aside for maintenance issues that will undoubtedly pop up in the first few months.  Other items to consider are property taxes, yard maintenance, utilities, and pest control, just to name a few 🙂

Real Estate Property Investment 101 – Location, Location, Location

You have heard it 1,000s of times: location, location, location!  As with anything connected to real estate, the location that is chosen is paramount! It is wise to invest in an area where there are a lot of people who are looking for rental properties or looking to buy. Purchasing properties that are close to transportation hubs, college campuses, and elementary and high schools will attract more renters and buyers.  Another often looked over market is large military bases.  These have a large collection of folks that have typical 2-3 year assignments and will almost always elect to rent vs. buy.

Real Estate Property Investment 101 – Reason for buying

Everyone has different reasons as to why they consider buying a real estate property. It can be a type of security and one of the safest long-term investment a person can make. You can sell it for a higher price or rent it out for passive income. It can even be inherited by your family  Just make sure to have all documents at hand for legal purposes. Files such as a prepared quit claim deed will make transferring of property easier and faster.

Real Estate Property Investment 101 – Realistic Returns

Investing in properties can be a safe bet if you work to build a bit of knowledge in this area. However, an investor needs to be realistic when it comes to what they are looking for in returns. If the housing market is in a downturn, it is going to be a lot easier to buy distressed properties, refurbish these properties, and then rent them in order to make a good profit. However, as the market strengthens, a real estate investor should expect it more difficult to find deals with large returns on investment.  Because of this, it pays to really capture all the financials to verify a property will be a good fit for your portfolio before you sign on the line that is dotted 🙂

Real Estate Property Investment 101 – DIY Renovations

A lot can be said for investors who are willing to dig in and get their hands dirty by doing some of the renovation work themselves. An investor who is willing to renovate their property themselves as opposed to paying a contractor is going to see a drastic increase in their profit margin. This is often referred to as building sweat equity.  It is not atypical for a DIY renovator to garner a 10%-20% premium (or more!) on their investment for cutting out the middle man and getting their hands a bit dirty.  Again, it is important not to bite off more than you can chew when first getting started with real estate property investment.

Real Estate Property Investment 101 – Final Thoughts

As a final tip in closing, it is important for investors to understand the importance of purchasing properties logically.  It is very important to not allow one’s emotions to get the better of them. It is best to think things through, develop a cost/benefit plan, and then buy only if the property meets your return on investment criteria.  There are always plenty of trains leaving the station!