Investing in real estate is one of the key ways to grow your wealth. It is one of the best ways to secure your finances and build your investment portfolio in a safe manner.
When making such an important decision, you need to ask yourself five important questions to ensure you are on the right track.
We understand this sounds like an obvious question, but trust us, this is an important one! Understanding whether you can afford an investment is a very necessary skill. This ensures that you are not overshooting your investment ability.
. For many first-time investors, buying property, either a plot of apartment, can become a costly business. The truth about real estate investment is, it comes with hidden costs. Investors often have to shell out additional money on maintenance, repairs and more in order to make it valuable. There are also ongoing costs to consider like EMIs, home insurance, property taxes, etc.
The best part about investing in real estate is you can decide whether you want to be an active or passive investor. While it is easy to assume that owning real estate makes you an active investor, there are several ways in which you can earn passive income. Now, it is important to know which way you think would be feasible for you in terms of your time and bandwidth.
Active real estate investing means you’re either a landlord or a house flipper. This means you will be incharge of investing in a property, and either renting it out or selling it to another buyer for a bigger profit. Either way, you’re the one who owns the property and is responsible for making a profit off of it. On the other hand, passive investors make money in real estate without having to spend that much time or work. A good example of passive investment would be where you buy a property and find a professional to manage it. In addition, investing money in a REIT or a crowdfunding site are also passive income strategies. This makes a third party incharge of maintaining the property while you get a cut of the profit.
Assess your time and figure out what time of investment would work best for you.
The real estate industry is filled with opportunities for you as a potential investor. There are countless strategies for investing in real estate – which could be either active or passive. For instance, there’s the buy and hold strategy, fix-and-flip, real estate wholesaling,commercial real estate investing, mutual funds, land, etc. But with plenty of options comes the problem of choosing what would work best for you.
Beginners can get easily overwhelmed by all the different ways of investment. Don’t worry! Take a step back and thoroughly research each strategy on your own time and see which one would suit your current situation the best.
Once you’ve determined which investment strategy you want to go with, then choosing the type of real estate you want to buy is a piece of cake! If you’re a beginner to real estate, go for investing in properties that need less maintenance and are more affordable. Investors should pick the asset type that is more promising and is in continuous demand from both tenants and buyers. Basic research on the market will help you decide which type of investment property you should go for.
Your investment location is one of the deciding factors that determine how much your property is valued in the market. The location affects your rental income, cash flow, cap rate, appreciation rate, and many other factors that determine how profitable an investment property is ?
In order to answer whether you understand the housing market, think about the location you had chosen for investing in real estate. Ideally, the best locations to invest have a few factors in common These factors will lead to a high demand for housing and rental properties in the area. These areas have high potential to give you a good profit and ROI. The main features to look for in an investment location include:
Rising working age population
Low unemployment rates
Local restrictions on new construction
Reasonable purchase prices
So, you have enough money to afford investing in real estate, you’ve decided on which investment strategy and asset type you’re seeking, and you’ve decided where you want to invest. Now the time has come to find the right investment opportunity for you. Here’s how you do it.Investment tools! The internet has a variety of resources and tools for you to do your research.
Making the right decision regarding your investment does not need to happen overnight. If you are on the lookout for professionals who can help you seek the right opportunity for you, head to www.wisdomproperties.com and browse the collection of available residential plots and apartments for your investment needs