The world of real estate investment is attractive for a number of reasons. It can be a great way to make good money, as well as diversify your assets. If the stock market takes a tumble or you run into some serious financial setbacks, you can rest easier knowing that you have some value stowed away in the form of an extra house or property.
While properly investing in real estate can spell big money for you, an improper investment can dig you into a financial hole that you wouldn’t wish on your worst enemy. In this article, we will explore ways to maximize chances of the former and minimize chances of the latter.
Being in the know in real estate allows you to make the right decision at the right time, but staying up on current trends often takes a concerted effort. One of the best ways to make sure you are on the cutting edge of market knowledge is by listening to real estate podcasts.
One of the best aspects of podcasting is the ability for broadcasters to specialize in a certain area of expertise. Getting familiar with real estate podcasts makes you privy to knowledge traditionally only available to those who invest their entire lives in the business. This is true in regard to many domains of podcasting, but it can translate to big money in the case of real estate.
Look Into Location
Feeling out the location and future prospects is paramount in real estate. Informed real estate magnates advise looking for the worst house on the nicest street. As you get deeper and deeper into the business, you will come across this adage repeatedly. This gives you the best of both worlds since you can likely get a bargain deal on account of the house needing work. Once the place is renovated, its value can climb to rival the other houses in the area. This model often provides a good return on your money.
Know When To Sell
Research suggests favorable odds to sell for those with low loan-to-value ratios for your real estate. Conversely, having a high loan-to-value ratio means a longer average time to sell. This is because a higher ratio necessitates a higher asking price. Knowing this, decide your own tolerance and what your goals are. If you want to have a quick turnaround, taking on a big loan probably isn’t the best idea.
Study Tax Benefits
The government wants to incentivize private real estate owners to provide housing because they know that if there aren’t enough places to live, the government will have to take on the responsibility.
There are several ways to use real estate to put off tax bills. You can recover the cost of income-producing property through depreciation. This is one of the ways in which risk is minimized on your part thanks to the government wanting you to provide housing.
Homeowners also win with personal residence exemption, which safeguards the sale of a residence from capital gains tax. This means a significantly larger chunk of change is yours for the taking should you sell a house.
Consider Joining An Investment Group or Club
Going at real estate can seem daunting to the solo investor, especially if they are a novice. Joining others in an investment club will help take some of the pressure off you while fostering relationships that can be highly educational to the newbie. However, as with any business endeavor, it pays to be thorough in your pre-agreement investigation. There are some predatory individuals looking to cash in on the doe-eyed rookie. Look into a person’s references and history.
An investment group allows willing buyers to own self-contained property within a condo or apartment complex, while the company provides ongoing maintenance, advertising, and tenant screening. This is a good deal for the hands-off investment approach, but it comes at the cost of a percentage of monthly rent.
Mind Your Credit
Buying real estate generally requires borrowing money from somewhere. This means you should make sure your credit score is in good standing before taking a deep dive. If you notice some blemishes on your credit report, resolve them as soon as possible. Looking into legal assistance for credit repair might be ideal, depending on the situation.
On the contrary, if you have a legitimately low credit score due to past behavior, it might take time to rebuild it to the condition necessary. Banks are more cautious about lending you money for a mortgage if the property in question is not your primary place of residence. For this reason, you need to win them over with pristine credit first.
Learn About Wholesale Options
Some of the best stock investors in the world attain such status by getting greedy when others lose courage. The same tactic can be used to great effect in real estate. There are many opportunities to buy property at a fraction of their potential price, so dig around and see what you can find. Often, these places will need some work, so do some calculations and see if it’s feasible for you.