5 Things to Know Before Investing in Real Estate for the First Time
A portfolio without real estate amiss an exclusivity. Period. Because invest in stocks as much as you want, they lack that assurance and sustainability. And for many retail investors, the risks often far outweigh the return potential.
But even when a Holy Grail for investors, real estate investments isn’t easy and simple. First, limited in capital, not everyone can spare that big amount. And second, not every property promises the same returns; some are better, some are outright a losing bet. This whole situation confuses many, putting them off the market.
So, if you’re planning to source your money in properties for the first time, there are a few things that you must very certainly know before making any jump.
They’ll fool you with marketing tactics
Marketing tactics of real estate builders are some of the best. They can literally sell you on a bird’s nest. Meaning to say, what you read in their convincing advertisements aren’t always true. There are chances that the ads you’re consuming are completely misleading.
The rooms might not necessarily be the way the images claim. The nearby lake might be a hotbed for diseases and not necessarily be a destination for jogging elderlies as the descriptions suggest.
So, when picking the right properties, it’s important that you don’t get carried away by such marketing materials, some of which might come to you from sources and channels that you trust.
Do your own homework
You can’t trust others to deliver you optimum ROI. In matters that involve such large money, you’re better off relying on yourself. So, before finalizing on any particular property, you must do extensive homework yourself.
Visit that property in person, get in touch with other investors, find out more about the builder, understand the economic condition and prospects of the locality where the property is sited.
These simple measures can end up taking you a long way, ensuring you have invested in a safe, secure and prospering asset.
The property cost will screw your plans
So many people usually underestimate the property’s expense. They get so fixated about the mortgage payment that they overlook the other way. And this eventually screws a large part of their financial planning.
Don’t be one of them!
Be very certain about all the operating expenses of the property—right from insurance and maintenance to utilities and management. Calculate them. And then incorporate that figure in your asset management and investment strategy. You don’t want to go in a deal at one figure and then realize that mark is much higher. It’s the biggest rookie mistake you can commit.
There are ways to pool fund with other investors
Here’s what many first-time real investors do…
They see a very good property. Assured of high returns, they want to buy it. But they are limited in budget. So, they usually opt for a real estate that’s a step down to their original choice. While this may have been okay a few years back, because, well, there’s a capital crunch, it’s not the case today.
Today, pooling fund for top real estate investment companies is easier than ever. You can get together with investors like yourself, pool a required amount, and then invest it in good properties rather easily. This arrangement makes investing in high-end bungalows and apartments in posh areas rather convenient.
There are a handful of good best investment companies who can help you in this avenue—connect you with other interested investors and mediate a balanced arrangement for mutual profitability.
There’s a lot beyond residential properties
For many investors, residential properties are the go-to. This doesn’t necessarily have to be the case for you. Beyond it, there exists plenty of options, some of which are much better.
Today, courtesy of the above-mentioned arrangement, investing in commercial properties, and even in government projects, has become incredibly easier. Along with other investors (or alone if you’ve got adequate capital), you can put your money in hotels, broadways, tunnels, shopping centers, bungalows and more.
Such investments, although hefty and costly, comparingly, are much more rewarding than an average residential property.
These are 5 things a first-time real estate investor must know right from the get-go.
Remember, investing in properties is not that easy. However, with the right decisions, you can easily tame the involved risks and maximize the returns.