Investing In Real Estate – Tips to Help Out Beginners
The real estate industry is extremely lucrative for any person who is interested in improving their investment portfolio. In fact, when it comes to real estate, the degree of security you get to enjoy with it has allowed it to be counted among the best investment options for beginners as well. Investing in real estate is already hailed for a secure financial investment.
On the other hand, if you don’t know how to handle your assets, you could end up facing a lot of difficulties, especially if you are just starting out. Like any other investment marketplace, it pays to be a little bit cautious. To have a secure foothold in the real estate market, you need to be aware of a few things that can go a long way in ensuring that you are able to get the best out of your investments.
In real estate investments, you can make money in the following manner:
- Appreciation of Real Estate Investment – This process relies on the gradual increase of real estate property according to the trends in the marketplace. This means that you can simply own property in a neighbourhood and as demand increases; your property’s value will also increase. This allows you to sell it for a higher profit margin. On the other hand, this is one of the trickiest ways to invest in the real estate market due to the fact that it that there are bigger risks involved. The value of your property can also depreciate because of the property market.
- Establishing Cash Flow – This is usually touted for being one of the easiest ways, but it requires a lot more work. Establishing cash flow in real estate is only done by owning rental property. In this manner, you can easily get a regular flow of money that is based off of the rent that the tenants are paying. Once the cash flow is established, a person can easily sit back and enjoy monthly returns on their overall investment.
Sounds simple doesn’t it? However, there are different challenges that each option provides. Even seasoned investors can face problems in either option when they are looking to ensure that their real estate investment and property assets remain healthy with ease.
Pros and Cons of Real Estate Investment
Due to the fact that you will always hear glowing reviews about real estate investments, it is a good idea to do some research beforehand. In this case, before you begin, it is always a good idea to weigh the pros and cons of real estate investments. This ensures that you don’t end up changing your mind when you’re faced with challenges.
For this reason, we’re going to briefly highlight them here:
- You get to enjoy more direct control on your assets when you are investing in real estate, unlike other investment marketplaces.
- You get to enjoy long-term, consistent returns on your investments
- Your investment property is an asset that entitles you to tax benefits, particularly if it is fulfilling a need such as a rental property, an office space, a shop etc.
- Your investment is also insured, allowing you to enjoy a greater degree of security.
- Good cash flow on a monthly basis if the property is managed properly.
- Your investment property gets to appreciate in value over the years, particularly if it is well maintained and has upgrades that add value to the overall resale value of the house.
- Unlike the stock market, real estate investments aren’t as volatile and allow you to manage them properly.
- Returns on real estate properties are offered on a long term basis and can take some time to grow
- Assets in real estate cannot be liquidated immediately if they are needed. In cases where you need to sell quickly it can be difficult to find the right buyer.
- The real estate market can be a bit fickle at times. Just like properties can appreciate in value, they can also depreciate, based on the state of the market.
- Management of real estate properties can be very time consuming, especially when you have rental properties are looking to establish a healthy cash flow through rent.
- In the event that you want to make a pure investment, it can be difficult to find financing options.
The good thing about real estate investment is that the pros, outweigh the cons but it can also be vice versa for you, depending on what you are looking for. Similarly, a lot of the pros and cons depend on the kind of real estate assets you posses. Luckily, in real estate investment, you will find a lot of different properties that you can investment in.
Seasoned investors in real estate can easily navigate through these properties with ease but when you are just starting out, the choices and possibilities might seem endless and also confusing. The following are a few more tips that can help you make the right decision when you are thinking of investing in real estate:
Pick a Property
One of the major challenges you need to overcome is to pick the right property with regards to your goals in mind. If you want to establish monthly cash flow, you need to pick a residential property or a commercial property that will allow you to do so. Residential properties can be apartments or houses, based on the kind of budget you have as well as the property that is available.
However, it is best to start out small. In this case, this means that you don’t have to buy an apartment complex with 24 units straight away. Start with something small and then move on to bigger options. Commercial rental property is always meant for use by offices and is located in prime areas. These can be harder to buy but they are a worthwhile investment because you can get a more consistent cash flow with it.
Know Your Financing Options
Finding proper financing options for your real estate investment can be a bit of a challenge. Most investors choose to approach banking and financial institutions but it is more difficult to obtain a mortgage for investment purposes than it is to get a mortgage for a property that will be your primary residence. This means that you can expect to get higher rates for interest.
Another factor that you need to keep in mind is that rental properties are subject to maintenance fees, costs as well as taxes that you need to factor in mind. Don’t think that your cash flow is going to cover all of these areas. When you are just starting out, the cash flow can be more of a trickle. Once the building is at maximum capacity, you can begin to get a healthier cash flow that will be able to cover these. Until that time though, you need to have a financing option available for you. We highly recommend RDM Mortgages for all your mortgage needs.
Keeping an Eye on Local Trends
Local trends can impact the overall value of the property so you have to pay attention to this factor. Don’t rely on national trends because they can deceptive. Most property market fluctuations can be limited to a particular state, city or even a neighbourhood so you need to keep an eye on this factor. A good thing to do here is to opt to work with a local real estate agent who can help you figure out the best property and the best area you should be buying into.
Due to their in-depth knowledge of the marketplace, you will be able to get the best property and explore different investment options in the real estate industry. While many beginners also tend to baulk at the thought of working a real estate agent because of the fees of their services, the help they provide can prove to be invaluable if you are looking to speed up the process and bypass a lot of the pitfalls that beginners can face.
Work with Professionals
Finding a good real estate agent who can help smooth out your hunt for the perfect property for investment can go a long way in ensuring your success. For this reason, it is a good idea to include a professional, local real estate agent in your research phase so that you are able to start off on the right foot when you are entering the real estate investment market. If you’re looking to work with a good real estate agent, get in touch with Mandy and Joe Kovacevic.
Their services include free home evaluations, as well as a free market report that will allow you to be aware of the current worth of your home and more. Whether you want to invest in real estate, improve the overall value of your home or are searching for your dream home, you can trust Mandy and Joe Kovacevic to do it for you. For more information regarding their services, give them a call on (519) 578-7300 or fill in the online form and they will get in touch with you.