Investing in real estate is a great idea but it’s nowhere near as simple as some people make it sound. There is a learning curve and there are plenty of lessons to learn before you’ve fine-tuned your strategy.
1. Start small
Starting off with an apartment building with 50 or so residences is not ideal. Starting with a single residence house or condo is the better approach. This will allow you to get your feet wet so you can find out what being a landlord is all about. Once you’ve been at it for a few years, you can then decide whether you’re ready to expand your portfolio or whether you’ll better off cutting your losses.
2. There are different types of real estate property
Residential buildings aren’t your only option when investing in real estate. You can invest in commercial and industrial buildings and you can also invest in real estate investment trusts. Look into the different options to find out the one that suits you best.
3. Don’t invest with your emotions
When investing in real estate, it’s not a question of how much you like the property. It’s a question of whether or not it makes financial sense. One of the things to consider is whether the property has a resale value in case you decide it’s time to sell.
4. Check your credit score
There’s a good chance that you’ll need financing if you’re thinking about investing in real estate and this will require a good credit score. This isn’t the time to be opening up new lines of credit. You should instead work towards improving your credit score by ensuring you pay your bills on time and doing more to reduce your credit card balance.
5. Do your research on banks, mortgage brokers and realtors
When you invest in real estate, you’ll need to work with all three of these groups and you’ll want to ensure that you get deals that favour you. Realtors can help you to find the right properties to invest in while the other two can assist when you need financing. Find out what previous clients have to say about their experiences with the people you’re thinking of working with.
6. Be ready to call it quits
As good as the going may be, things in the real estate sector can suddenly dip as was witnessed in the housing market crash of 2008. When this sort of thing happens, it helps to have an exit strategy so you can cut your losses early enough and sell the property when the losses are minimal.
7. Get in touch with other investors
Other investors in the area can be a valuable source of information on many things. Find out when and where investors in real estate are meeting and see if you can use this opportunity to get more information from them regarding any issue you’ve been having or just to get tips on how to make the most of your investment.