Investing in real estate is not something new — in fact, there were around 186,720 real estate and property managers in 2017 alone. If done right, real estate investment can be very rewarding with an additional, steady income. So if this is something you’ve been considering, keep reading for some basic real estate investment tips for beginners.
Know the Market in Your Area
It’s important to note that different areas in the country, even different areas in the same city, have different costs of living. And if you live in an area with a high cost of living, you may have to be more hesitant about which types of properties you’re buying.
Simply put, if you pay more for a property, you’re going to have to charge more in rent to afford the property. And if your rent rates are higher than others in the area, you’re going to have a difficult time finding tenants. So before you make a purchase, consider the market in your area — knowing both average purchase prices and rent rates will help you make an informed decision.
Consider the Condition of the Property
Depending on your budget, you may find yourself looking at less expensive homes that you plan on fixing up to sell or rent out. If this is the case, it’s crucial to understand the condition of a property you’re interested in. Many people make the mistake of thinking a house isn’t in too bad condition and then they get in way over their heads and lose a lot of money on the project.
A whole 98% of homes with basements experience some type of water damage, so when you’re looking at potential properties, it’s important to have a thorough inspection done so you can know what you’re getting yourself into.
Start Out Small
Investing in real estate seems simple enough, which is why many investors jump in too quickly. If you’re just starting out, you want to start with something small. If you have a spare room you can rent out, start with that — get used to collecting rent and taking maintenance requests. From there, invest in rental properties, like a two-bedroom house.
And as you gain both experience and money, you’ll be able to move up to bigger projects, like a whole street of houses or an apartment complex. But you don’t want to go too big right from the start because the risk is too high. So start small and slowly make your way up to bigger properties.
With a Better Homes and Gardens Real Estate survey showing the 89% of U.S. investors are interested in real estate, it’s a competitive market. But if you follow these tips and take your time easing into the market, you can be a successful real estate investor in no time.