According to the Balance’s small business section, Memphis and Houston are two of the top locations to own property. Is that all the information you need to get started on your real estate portfolio?
No.
Instead of going into a deal blind, you need to be sure that real estate is even the best course of action for you. Continue reading this article to learn what you should consider before buying investment property.
What You Should Know Before Buying Investment Property
Before you start investing in real estate, it is better to know now than later if it is the right move for you. Just because real estate can make you a lot of money doesn’t mean it is right for you. Before you buy, you can use our real estate investment calculator to get the most information.
1. Location, Location, Location
When you are a real estate investor, you need to understand the location. You’ve probably heard that location is everything in real estate and this statement is true.
To be a next level successful real estate investor, you need to be a visionary. Use the information you have at your fingertips, but you also need to be able to see the future of what an area will become in the coming years.
If you look around a nice area, but you see signs it is going downhill; this isn’t going to be a good option for you. Make sure the location you choose has signs of growth so you don’t get saddled with a property that won’t rent or sell.
2. Learn to Notice Trends in Pricing
Study pricing. You need to develop the knowledge and skill to be able to look at any given property and at least have an idea of what a fair price is for it. You should also be able to figure out what is coming next.
Many people act like trends are something surprising, but if you look at history, you are able to get a pretty good idea of what is going to happen. History has a tendency to repeat itself in almost all areas of life.
3. Reno Doesn’t Equal Increase in Sale Price
When you put $20,000 into a home renovation, that doesn’t mean you added $20,000 onto the value of the house. Sometimes the renovation you do is to make the house livable. In other cases, a $20,000 reno can add $40,000 onto the sales price.
4. Negotiation
If you don’t know how to or don’t want to negotiate then real estate might not be the right investment for you. In general, people love to negotiate to see what they can get you to agree to when you’re going through this process.
When it comes time to sell a property, you should be ready to listen to potential buyers. Even if you don’t get the price you want, it beats sitting on a house for months waiting for it to sell.
5. Business Organization
If you can’t organize your affairs, your business isn’t likely to fair well. Make sure you understand how to structure your business and how to do business before you dip your toe into real estate.
Figuring out business doesn’t have to take place on your own. If you want to invest in real estate, you can work with a coach that can help you through the process until you understand how to structure and grow your business.
6. Act with Integrity
When you look at a property, do you see yourself making it a property that you would live in? Do you see yourself making it a property that you would rent to someone you love?
When you do business, all you have is your name. If you want to continue to be successful in business, you need to show people they can trust what you say. News of scams and cover ups happen quickly.
7. Get it in Writing
Verbal deals are worth as much as the air they are spoken into. If you don’t have the deal on paper then you’re not going to get the deal. It is as simple as that.
Make sure you document everything and get written consent, agreements and any other paperwork needed before you move forward with a project. While it is easy to cut corners, the problems that come along with it are not always easy to remedy.
Is Real Estate Investing Right for You?
Now that you have some more information about what real estate investing means to you, you have to decide if this sounds like the right path for you. Not everyone is cut out to invest in real estate. It takes a certain kind of personality to enjoy it and if that isn’t your personality, that’s okay.
If you do decide that real estate is the right vehicle for you, what are you going to do to move forward? Here are a couple of things to keep in mind when you’re getting started.
1. The Power of Focus
When you start in real estate investing, you need to focus on learning a specific area. If you go too wide, you’re less likely to find good deals because you don’t understand the area. Focus on a certain area and win big even if it is in a special region.
2. Knowledge Is Power
Continuing your education is vital to your success throughout the years. Put yourself around the brightest minds and keep learning at all times.
Get the Information You Need
When you’re buying investment property, it’s a rush. You are excited about generating passive income and you want to get into it right away. If you’ve done your due diligence and have a good property, you can make some serious cash.
