With the economy picking up and certain housing markets beginning to rebound, many investors are thinking that real estate may once again be a viable option for making money. While the markets still vary throughout the country, there is no doubt that there are opportunities out there. The trick is in identifying which real estate is worth the investment. Here are some tips for successful real estate investment.
1. Set Clear Goals
Flipping was hot during the real estate boom, but you can’t expect to get a fast turnover in today’s market. Set some realistic, long-term goals for the income that can come from investment properties balanced against the costs of maintaining the property over time. Also look at areas where you can purchase land that could be developed in the future. Just be sure you know what your financial goals are so that you can jump on the opportunities that fit those criteria when you find them.
2. Know the Market
This is where the hard work comes in. You need to know what states, cities, and even neighborhoods are prime investments versus which ones just look like they might turn a profit. This requires looking not just at available properties, but also rental rates, demographics, property taxes and insurance rates, and financing options. You should also consider whether a given area is attractive to your potential tenants, are there good schools nearby? Parks and sports facilities? Does the neighborhood have on street parking or two-car garages? Note: this is initial research about where you want to invest your money; this isn’t about finding specific properties. That comes later.
3. Get Funding Up Front
Get your finances in order and line up your funding before you start looking for specific properties. In many hot markets, like Phoenix and Las Vegas, properties are literally on the market for mere hours before an offer is accepted. If you go out looking for property without having the financing ready, you’ll miss out on many opportunities. Get the money in place first, then go out and find the properties you want.
4. Start Now
If you’ve ever considered investing in real estate, now is the time to do it. Every day you wait is a missed opportunity — or two or ten — that you’ll find out about later and will regret. The real estate market is extremely volatile, but with low interest rates, still low housing prices and foreclosures out there as well as rising rental rates in some areas, there is no time like the present to jump in and invest.