Posted In:Buying, Guide, Real Estate, Real Estate 101, Realtors, rental, rental property, Selling, USA
How To Start Investing & What To Look For
There are endless open doors and options when looking at investing in real estate. If done right it can be a fast and easy way to make money. Generally lower risk than the stock market, real estate investments can set you up for future financial security.
It’s important to note that making a bad decision or failing to do your research can cost you thousands of dollars. Before beginning your real estate career, study market trends from past years. Check professional forecasts and most importantly immerse yourself in your local market. Unlike stocks, real estate allows you to see your investments. Let this help guide you and do your due diligence before getting into business.
Real estate requires some cash or equity to get going. Don’t learn the hard way. Give yourself a buffer in case anything goes wrong.
What are the market trends for 2017?
Since the 2008 real estate crash labour scarcity continues to be a problem. The slow return of construction workers lessens the number of new homes being built. Ultimately this will drive up the cost of buying a home.
With less homes for sale the market is moving more quickly. Forbes says the raw inventory count of homes in December was down 4% from the previous year. This is a plus for homeowners looking to sell.
Low inventory of moderately priced homes leaves the home buyer with an average salary limited choice when it comes to affordability. Mortgage rates have also continued to rise since the 2016 election. Rates seem to be on a continuous climb making it difficult for the millennial generation to get a foot in the market. Along with this it looks like Millennials are leaving big cities in droves in search of cheaper housing. The suburban areas of the Midwestern states will be a popular area for settling down.
For the landlord, things are looking strong. Rental vacancy rates are very low and property owners are making strong profits on their investments.
How can you make money?
These are different ways that you can make money in real estate. The list is not limited to the options below.
- Increasing equity – Owning a home is maybe the most basic way to earn money in real estate. Buy your home at an affordable price and slowly gain equity over the years.
- Rental income – A main profit source for many investors. Owning one or more properties can bring you to financial freedom later in life.
- Buying low – Managing to buy a property for under market value is a great get rich quick scheme. Don’t be scared of foreclosures and hone your negotiating.
- Multiple rents 1 unit – If you’re renting out a single family home, renting rooms to multiple tenants will get you more profit than renting to a family. Alternatively if you can invest in a multi-family home even better!
- Commercial – Moving into the big leagues, renting out a commercial space to a business will see you higher rents. The best part, typically you won’t have to deal with unruly tenants.
- Refinance to your advantage – By refinancing one property you can use the additional cash to finance or make a downpayment on another property.
- Flipping – If home demo, surprises, site management and gambling isn’t your thing you probably shouldn’t go into the flipping business. On the other hand if you are smart with your flip you can easily make thousands doing so.
- Real Estate Investment Groups – There are many different types of investment groups. Ultimately it allows you to have ownership of a portion of property without being the landlord. There’s no maintenance but you do pay out a percentage.
Full or part-time?
Many people who have been in the real estate business for a number of years manage to juggle their ventures part-time. Bloggers, landlords and investors can balance a separate full-time job alongside their part-time ventures efficiently. Depending on how you decide to invest in the market it can occupy a lot of your time. Being a landlord would require you to drop what you’re doing at a moments notice when your tenants are surprised with a flood. While you contemplate if real estate is for you, ask yourself what kind of time do you have to devote?
Getting into the real estate game can help you optimize your life and allow you more free time. There are so many options for investing and researching is key. If you put in the time you can reap excellent potential.