- Your first investment should be a stable one
- Never settle for the knowledge you have
- Remodel according to your key demographic
- Prevent disasters by screening your tenants
- Consult with an unbiased real estate agent
- Meticulous research pays off
Whereas property prices do fluctuate over the short-term, from a longer point of view, real estate markets are in an upward trend around the world, with the never-ending need for new residential and commercial properties in established and emerging economies.
Without a doubt, investing in property in both of these realms is a positive step towards a solvent and even affluent future, but only if you know what you’re doing.
As with any new business venture, your first step into the real estate world needs to be a calculated one, and your first investment needs to land you on even ground, if nothing else.
To achieve this, you need to learn the ins and outs of the industry and take several key lessons to heart. Here’s what you need to know in six steps:
Lesson #1 – Your first investment should be a stable one
The real estate biz is unique in the sense that it truly has the potential to get you rich overnight.
But it most likely won’t.
And you shouldn’t pursue that life-changing investment opportunity on your first try either. Instead, your first investment needs to be a stable one, and investment that will generate steady cash flow, such as a successful rental property.
Renting a property yields long-term financial gains, while flipping a property yields immediate monetary gains – you will need to decide which option is best for your current financial situation. Unless you are sitting on a mountain of cash and you can risk flipping a property and selling it a year later, then go ahead and flip it. However, if you are like the majority of first-time property investors, you will need to be more careful with your assets.
Always choose a stable long-term option on your first investment.
Lesson #2 – Meticulous research pays off
In the modern real estate world where opportunities are plentiful and amazing properties are popping up at every corner, it would be a wise business decision to spend a significant chunk of your time doing market research. Start by making a list of all of the properties that lie within your price range.
Next, make a pro and con column. Spare no details and note down every aspect of the property and its neighborhood – this will allow you to eliminate properties one by one and narrow down your search to the most lucrative prospects.
Don’t just take the current socio-economic climate of the market into consideration, but dig deeper to find out what plans the authorities have for the entire neighborhood.
Monitor the local market trends to find out if the investment opportunity will be as lucrative in the future.
Lesson #3 – Never settle for the knowledge you have
The real estate game is constantly evolving and if you don’t keep up with the latest trends and best practices, you will fall behind.
What might have seemed like the investment opportunity of a lifetime could become a money pit tomorrow, so all the more reason to stay on top of market trends, and gather deep industry insights from professionals.
Before dipping your toes in the real estate waters, be sure to network and connect with prominent investors. Complement the lessons you gather by attending property investment seminars in order to combine practical and theoretical knowledge and learn the ins and outs of the trade.
Never settle for a single viewpoint, because another investor’s path might greatly differ from your own. Instead, strive to always expand your horizons, and never settle for the knowledge you currently have.
Lesson #4 – Remodel according to your key demographic
No matter if you are flipping or renting a property, you will need to invest in a thorough remodeling project.
The steps in this process should vary based on a number of crucial factors – there simply is no cookie-cutter solution. You need to tailor your remodeling strategy according to the demographic you’re catering to, as well as the neighborhood in order to remain compliant with the local (building) laws.
This is a delicate process, but when done right, it can maximize the value of the property and help you close a deal in record time.
So, even though it’s quite tempting, don’t remodel to your taste and preference, but rather find out what your demographic needs and wants!
Most importantly, don’t over-improve the property, as doing so will needlessly drain your resources for a negligibly improved ROI.
Rather be methodical in your approach, choose designs and materials that suit your true demographic, and you will save money while producing a higher property appreciation.
Lesson #5 – Prevent disasters by screening your tenants
Many inexperienced property investors make their first mistake when they fail to screen their potential tenants. Again, this goes for rental properties and those you intend to flip for a quick profit.
If you don’t screen your tenants and assess their true financial standing, you could easily lose money on the property, prolong downtime, and worst of all, let the wrong people in. This can lead to numerous financial hurdles down the road, so make this step a priority.
Lesson #6 – Consult with an unbiased real estate agent
Experienced property investors might be able to manage their portfolio all on their own, but novice investors should work with a reliable property advisor.
After all, these people specialize in getting you the best deal possible and discovering those hidden gems that are below the radar of the public.
If you’re new to the game, you won’t have access to these exclusive listings, but your agent just might. Find an unbiased professional to assess whether or not a property is a viable investment.
Investing in real estate is one of those career moves that has the potential to quickly transform your life and turn you into a successful businessman or woman.
That said, there are many perils on the road to long-term affluence, so be sure to take these lessons to heart in order to pave the road to a multi-million-dollar portfolio.