There are many things to consider when it comes to real estate investing. If you're just getting started with your first property, it can be tough to know how to get into real estate investing. We've put together this list of six must-know tips to help you stay ahead of the competition! Whether you're looking for Shoreline property management services or want to learn more about the industry, this blueprint will help you start investing in real estate.
Step 1: Identify Your Financial Stage
As a real estate investor, it’s vital to determine your financial stage. This will help you tailor your investment strategy accordingly.
For beginner investors, it may be best to focus on smaller investments to get experience, save money, and learn the ropes. Once you better understand your finances and what you can handle, it is time to consider more significant investments. Some of the more substantial investments you can make include:
- Property development that involves purchasing land and constructing or purchasing new homes on it
- Real estate syndication that involves pooling money with other investors to purchase properties and then renting them out
- Crowdfunding is a newer investing method that uses online platforms to raise money from many people
Once you have identified which type of real estate investment is best for you, it’s essential to do your research, understand the risks involved, and note the operating expenses and maintenance costs to ensure a positive cash flow. Many resources are available on the internet that can help you learn more about the market and the different types of available properties.
Step 2: Choose a Specific Type of Investment Property
When choosing a type of property to invest in, it’s essential to consider your goals for the investment. For example, many investors focus on buying and holding properties. In contrast, others may want to make quick profits by flipping properties in areas where buyers are in demand.
Five main categories of real estate include:
- Residential real estate. The most common type of real estate used for housing people
- Commercial real estate. Properties used for businesses purposes
- Industrial real estate. Typical for factories and manufacturing
- Raw land real estate. An undeveloped property without a specific purpose
- Special purpose real estate. Properties appropriate for one use or limited use
Before purchasing, be sure to research the different properties available in your area and determine which approach works best for your goals!
Step 3: Calculate Your Expected Return on Investment
When calculating your expected return on investment, it’s crucial to consider both the short and long-term outlook of the property market. Think through how much risk you are willing to take on as a property owner and your financial goals.
Some factors that can affect your expected return on investment include the current market conditions, the type of property you are investing in, and the property's location.
Step 4: Consult Experts About Local and State Laws
Knowing local and state laws and how they change is essential for a real estate investor. This will help you stay ahead of the competition and avoid potential legal issues. Property managers recommend consulting with an attorney if you have any questions about the legality of your specific investment plan or strategy. There are many complex real estate investment schemes—if you're not sure whether something is legal, it's best to get advice from an expert.
With over 35 years of experience, our expert Shoreline property management team is always ready to assist you in answering questions you may have about the legal aspects of your initial investment.
Step 5: Time Your Real Estate Investment Wisely to Market Fluctuations
Timing can be everything when it comes to a good investment! If you wait too long to buy a property, the market may have already shifted, and the property value may be too high.
Conversely, purchasing a property before the market peaks may get you a better purchase price. There are also tax implications to consider when buying or selling rental properties, so it's crucial to consult with an accountant or realtor before making any decisions.
Step 6: Hire a Professional Property Manager
Real estate investments can be a lucrative career choice or method of generating additional income, but it's not easy. Rental property investors must be prepared for the long haul and make intelligent decisions to maximize their returns and ensure a positive monthly cash flow. If you're wondering how to start investing in real estate or make more money with your current real estate portfolio, consider hiring a property management company. Property managers serve as experienced business partners who can provide you with market research and resources to make informed investment decisions.
In the Shoreline area, reach out to The Joseph Group! In addition to our residential property management services, we’re also an invaluable source of knowledge to maximize returns on investment properties. With our help, real estate investors can confidently invest in the right property and earn long-term returns.