Investing in real estate is just like other investing opportunities — put money in and turn a profit.
Of course, it’s a bit different in the real estate market. Most people think this type of investing only entails owning one’s home, but that’s not all there is to it.
Real estate investors can buy a house by paying some of the costs outright while having the rest of it financed. They can also put their property up for rent to earn income from it. Finally, they can sell the property as the property rate increases to turn a profit.
Whatever category you might fall under, investing in real estate in 2021 requires some deliberateness. It’s more than just looking at a building you think looks good enough to buy. You also have to do your research and know what you’re doing.
Read on to get our tips for real estate investors that want to thrive in a 2021 market.
7 Real Estate Investing Tips
If you want to succeed as a landlord and reach your investment goals, you’ll have to stay informed, and have a great team behind you!
Ready for 7 essential yet straightforward tips that will keep your real estate business booming in 2021? Here’s what you need to know:
1. Pick a Budget
The first thing you need to do is decide on a budget for your real estate investments. You don’t have to put your entire investing portfolio in the real estate sector. With a budget, not only will you be able to pace yourself, you will also be able to decide what type of properties suits your portfolio more.
Real estate investing without a budget can end up leading you into a debt trap. Remember that budgets for properties also include recurring costs like property tax, maintenance, property tax, and upgrades.
2. Pick a Property Type
Now that you have a budget that sets boundaries for you, go ahead and choose a specific property type to invest in. Several questions will help you make an informed decision here.
For instance, you can examine your existing rentals or the types of properties you already own. The type of property you can buy includes a plot of land, commercial property, or a housing unit.
Knowing the current trends can also help you pick out the best property type to invest in. Understanding what sort of buildings will be sought after in the coming years will greatly influence the type of property you purchase.
3. Diversify Your Choice of Investments
A lot of advice on real estate investment usually preaches investing in your backyard. That is, somewhere you are extremely familiar with, like where you live or already own property.
While there’s a lot of merit in this advice, it can also be limiting. If you’re only considering a small geographical location, you will limit your opportunity to make even more profits. Instead, you can add more locations in the same state and even further to your options.
Another advantage of diversifying your portfolio is that a wider range of investments ends up being a safer bet against the volatility of local markets.
4. Do Adequate Market Research
A major reason people find it hard to invest in properties that are not in their backyard is inadequate research. If you put a lot of effort into research, you’ll be well-informed on the high and lows of any current market.
You can research the rates of property in different parts of the city, the crime rates, or the rates at which people are moving into that neighborhood. You can also research the quarterly, half-yearly and annual trend of the previous years.
Another great way to learn about a market is to talk to local experts. You can have individual conversations with people who live or have lived in those places.
5. Do a Physical Visit
While carrying out remote research might seem enough, don’t fall for investing in a location you haven’t seen simply because you “trust” the vendor. Instead, explore the location in real-time. A real estate location is a major turn-off or turn-on for real estate investing.
Don’t just research rising prices; take the location into consideration. For instance, if you are buying a commercial location, is the spot perfect for a business lease? Is it a calm, quiet living neighborhood or a bustling tourist attraction?
Whatever the physical details are, you should bring these factors into your decision-making.
6. Check Finance Options
The next thing you should find out is whether you can purchase the property on finance. Not every property qualifies for financing by financial institutions.
You would want to clarify with your bank or account manager whether you can obtain any finance on the property and how much of it you can access.
7. Consult with Experts
Now that you have all the information you need, it is easy to think you can easily make an informed decision by yourself. However, it is expedient that you talk to experts in the fields that are necessary to your real estate investments.
Speak to lawyers, brokers, real estate managers, property managers, financial institutions and present all the data you have. Clearly outline your expectations and projections. Experts with years of experience and exposure will be able to look at the data you’ve presented in the right light and give you actionable intelligence.
If this is your first real estate investment, you might also want to discuss with someone who has some experience as a real estate investor.
Apply these Tips for Real Estate Investors
The trends in real estate investments are increasing day by day. It is easy for you to get caught up in the whole buzz and make a move you think is right without adequate research.
The market can be a great place to invest, where you enjoy stability and get profits, but you also need to make sure you are looking before you leap. Apply these tips for real estate investing to tread more wisely and reach your goals in the real estate sector.
Nichole Shahverdi is the director of marketing for Bay Property Management Group. Prior to taking over the marketing division, Nichole led the company’s leasing division as the director of leasing. It was in running the leasing division that she discovered her passion for marketing and looked to expand her creativity and knowledge by diving into SEO and digital marketing.