The Simple Formula for Success in Real Estate Investing for Beginners
Real estate investing, even on a small scale, is a tried-and-true means of boosting an individual’s cash flow and wealth.
Individuals and businesses can invest in real estate in a number of different ways. Buying property for resale or leasing it out have been the usual ways.
However, today there are new innovative ways of property investment that are increasingly becoming common.
Below are some of the innovative ways of real estate investment:
The concept of licensing.
A license allows third parties to access your property at a fee. It is attractive for short term stays such as photo shoot events and holiday rentals.
Air bond is an attractive form of license where by the home owner allows people to access his house for a number of days at a fee.
Some of the risks for the home owner include breakages and damages, illegal use of property, theft and pilferage
This is when a homeowner purchases a facility that can house multiple families, such as a double unit.
The owner lives in one of the units and rents the other. This allows the owner to not only live in his own home for free, but also to generate money.
These are regulated and enable the investor own large tracts of property as a unit or share in such an investment scheme.
A property investor’s rights include charging interest, attaching assets, eviction and suing to recover from the tenant.
Under Article 40, right to property the constitution protects the investor from arbitrary deprivation of his property. Hence real estate investment is fairly safe.
Below are ways that can help you as an investor can get started:
Do your research
As a real estate investor, the first step is to conduct research and learn everything there is to know about the industry.
It is critical to understand why you are investing and what your investment goal is.
One of the first things you will learn as a new investor is the importance of location in the real estate business. The location of your business is basically what will determine your investments success. Some of the features to look for when deciding the location to invest in real estate are:
- Real estate appreciation rate
- Property prices
- Population Growth
- Current market trends
- Tenant occupancy
- Rental rates
- Mortgage rates
- Construction and opportunity for development
- Get your finance in order
Ensure that you are in a capacity to invest before taking any further actions.
Evaluate your current financial status and make sure that you are in a strong position to invest.
Many investors decide to invest in the real estate business in order to gain huge profits and create a passive stream of income.
Therefore, make sure your business is secured to prevent future risks and avoid huge losses.
Conduct a market analysis
Before you commit yourself to a property it is important to know exactly what type of return you are looking for.
If you are investing in rental properties then you need to do a Rental Market Analysis (RAM) in order to find out whether your rental property is profitable.
This will help you assess if the entire area is favorable for rental property investment. It also ensures that the property investment earns you high rental income to cover the rental expenses and also increase your profit.
This means if the rental market analysis is positive then the investment should yield positive cash flow.
If you are not sure where to start, it is important to consider partnering with someone who may be able to give professional advice in real estate investing.
If you are new to the world of investing, another alternative is to find a mentor.
You will still need the services of a lawyer and an accountant as a property investor to assist you comprehend legal obligations and maintain track of your funds.
Furthermore, you will be required to engage a dependable working team to provide maintenance and resolve any issues.
Finding the right investment property
The type of property you are looking for is determined by your investment strategy and planned budget.
You need to know that not every property you find qualifies for a profitable investment.
An investment property analysis will help you choose wisely and purchase the right property. It will assist you to calculate and evaluate the return on investment of the property you decide to acquire.
You can also do a research that will show you property listings that match with the type of investment property you are looking for.
A specific investment strategy is essential to long term success and growth in your real estate business.
There are several strategies for a real estate investor to increase profits.
- Purchase property and rent it out traditionally or as a vacation home rental to short term guests.
- Implement the buy and hold strategy or you could go for a fix and flip.
- Other strategies you can use without having to purchase properties for example real estate investment trusts (REITs), wholesaling and renovating your own home residence.
You need to focus on strategy you choose in order to profit from real estate. Take action and do your due diligence.
Use your options wisely and you will find that you can succeed as a first-time real estate investor.