This is a Guest Post by Curtis Brown.
5 Real Estate Investing Tips for Beginners
If you want to invest in the real estate business, you quickly learn that it’s much more confusing and a lot more to learn than you first thought. It is more difficult to invest in real estate today than to invest in stocks due to the legal, financial, and due diligence requirements involved.
This is a lucrative business, but to maximize profits, you need to obey the rules. Thus, familiarizing yourself with core concepts and fundamentals of investing will help you to stay on the right track. Here are five basic real estate investing tips you should follow:
The popular aphorism that ‘location matters’ is very accurate. Before you invest in real estate, make sure it’s in a good location. Instead of making a down payment for the best house in the worst neighborhood, it’s better to look for the worst house (that needs some renovation) in a great neighborhood or the best street. Every professional real estate agent knows that getting a good location is key to this business.
It’s easier than ever to find properties on the Internet and find a property that matches your needs. The beauty of finding such a house is that you can acquire it, fix it up, and sell it to someone that is looking for a ready-to-move-in house in a great location. This is what professional realtors call ‘flipping’. Buyers are willing to pay for move-in ready properties in desirable locations.
Understand the Tax Benefits
Government agencies want private real estate investors to provide quality housing, because if the private investors are unable to provide housing, then the government will be saddled with the responsibility of making this possible.
Because of this, there are some significant tax benefits. The most popular is the depreciation write-off. To illustrate, if you buy a depreciating building, you can write off the depreciation as a tax deduction. For more details, please consult with your tax professional.
Don’t Start Big
As a real estate agent in the field, you don’t need to begin with an expanded real estate investment or go all-in with an investment. The most innovative and efficient approach is to start small.
You can buy single, small real estate investments and experiment, before deciding that this is your calling. If you find out this is not the best plan for you, it will be easy for you to back off after a few purchases.
Furthermore, since you are new in the business, buying small will help you mitigate any mistakes you’ve made along the way. It’s easier to correct a mistake you made if you bought a few apartments at higher rates than if you bought hundreds of homes.
Know the ins and outs of investment property analysis
You need to conduct an accurate investment property analysis. In addition to location, there are many things you need to check, such as the type of return on investment; will it be better to purchase a residential property or commercial property? What are the advantages or disadvantages of these options? Doing an investment property analysis will help you determine what is the best path for you.
Work on building a real estate network
If you want to be successful, then you will focus on building a network that you can utilize. As a real estate agent, make sure you build a formidable network with other real estate investors, real estate agents, and contractors. Attend conferences, networking sessions, workshops and training opportunities where you can demonstrate your expertise. Develop a quality relationship with this network and dedicate yourself to being a go-to professional in your field.
Network with people who are passionate about the business, and those who want to make an impact in the industry, and good things will come your way.