Being successful in real estate investing requires a carefully executed strategy. Lots of patience, skill, and luck will be your friend once you get started with this investment opportunity.
1. Invest in a Good Location
One of the most important parts of real estate investment is to never underestimate how important location is. To determine a good location:
- Look at economic data to determine optimal growth rates.
- Check how diverse the industry is.
- Check population trends.
- Look at demographic cycles.
Once you find a good location, research it closely. Check for any connections in the area, and if there aren’t any, create one who can show you the numbers. If the numbers are good, you’re ready to invest in the area.
2. Know When the Time is Right
Try to identify the best time to purchase property in a given area. Investment is cyclical, so you’ll have to realize when the
best time is to buy, hold, and sell. This means you’ll need to get the property before the price goes up, hold the property until the price rises to a new high, and then sell it before the price goes back down again. Not only will this take some amount of skill and patience, but it will also require some amount of luck and fantastic timing.
3. Use the Power of Leverage
Leverage is a quality found in real estate investment which makes it substantially more advantageous than other investment opportunities in a few respects. Leverage is defined as the use of borrowed capital or financial instruments to increase the return on an investment. With the advantage of leverage, a small investment can often lead to a high percentage of returns. If property values begin to decline, your liquidity as an investor won’t be compromised, though you’ll need to continue paying the mortgage on the property.
4. Every Property is Different
Every property isn’t created equal. Things like rental income, maintenance expenses, and appreciation potential will vary with every property and location. Jason Hartman believes some of the best places to invest are in quickly growing urban and suburban areas in the U.S., primarily residential property. It’s encouraged to always conduct careful research and never make uneducated speculations. No one knows the future, and the industry is always changing.
5. Create Cash Flow
Generally, your objective should be to create positive cash flow. To accomplish this, make sure the properties you purchase have positive cash flow and are well-maintained. Search for bargain-priced properties. These properties may be below market value for a number of reasons, such as divorce or foreclosure. Many people offer these properties below market value for a fast sale, and it’s good to take advantage of them before the opportunity goes away.
Once you get started with real estate investing, be sure not to make any rash decisions. Research the market carefully, and keep these tips in mind.
The Young Wealth Team