Investing in real estate for the first time could be seen as a risky bet, we know it. The last economic crisis might make you rethink it. But do not fear! Like any investment, it has its risks, but it also has a great truth behind: vast fortunes are being amassed through real estate in a steady, safe and simple way. One of the best characteristics of it is that there is no need to be a big investor to do it.
To do so it is important to have the know-how of real estate, which is not a small thing if we consider that it is not as easy as buying low and selling high. So we have created a sort of guide to help you appreciate why real estate is a consistent option to build wealth more than other kinds of assets. Whether you have a big amount of money to start investing or you start from zero, here we will give you a little help with these expert tips for investing in real estate, that will grant you benefits sooner than later.
1) Get an income from the beginning
While one way of making a good deal is buying something, wait until its value is increased and then sell for a profit, an even better idea for the start could be buying something and secure a steady income. A wise investment is not based on hoping for a value to escalate but in purchase a property knowing that it will generate a greater income than what it cost to buy it.
The easiest way to do it is by buying a property that you can rent. With the money you will earn periodically after all the expenses are paid (such as a mortgage, taxes, insurance, maintenance, etc.), the difference goes right to your pocket. Nowadays, it is possible to make more profits thanks to the rise of temporary rental platforms, since those short-period rents are usually much higher than the longer-term ones.
2) Obtain the best financing terms
Real estate has incredible terms of financing, perhaps better than any other kind of loan. The interest rates are remarkably low, down payments are around 20% or even less and mortgage loans are amortized over periods of 30 years.
You can either pay the mortgage loan with the money you receive from your tenant and keep the difference (in which case your tenant is paying off the loan for you) or buy a property, improve its value and then recover the capital by 100% or more by refinancing. These loans result in an easy option to grow your wealth passively and steady.
3) Add value by improving the property
At the moment of purchasing a property, you can check the ones that allow you to improve their condition. This means you can pay below market value for a property that needs to be fixed or one that needs upgrades. The key here is to do a little investigation to find the properties with weaknesses and then add what they lack to increase its value.
4) Learn about the market and find assistance
Real estate, like any other market, has pitfalls. So you will have to learn as much as you can about the market in general and in particular in the areas you want to invest in. Information is everywhere! Articles, books, videos, seminars, talk to brokers and contractors, view open houses; everything helps. Once you find an exciting deal, you will need some assistance to answer the questions you will have in the heat of the deal. To answer them, find a real estate mentor, someone specialized in this kind of investment, and then go for it!
As we have seen, investing in real estate could really change your financial scenery in the short-term. Contact us if you want to take advantage of our experience in this market.