Investing in real estate does bring you long term profits, but it holds a certain amount of risk to it. Therefore, beginners and amateurs do ensure that they learn as much as they can about the ins and outs of the field. This way they can be well-informed and hence, face any amount of hurdles that come before them.
Rome wasn’t built in a day, likewise investing in Real Estate is not a day’s task. It needs a thorough study of the market and other intricacies.
Here are 5 questions that you ought to ask before you invest in Real Estate.
1. How can you finance your first real estate deal?
You would agree with the fact that every investment needs you to have a certain amount of money in your bank account! Real estate deals are often an expensive course of action for many first time investors.
There are a number of possible directions that you can take to finance your first real estate deal. You can go for the conventional method of borrowing a loan from the traditional lenders i.e. banking institutions. Furthermore, you can always opt to approach a private or hard money lender for the required finances. Then again, private lenders are a tad bit lenient with their loan requirements and hence, charge higher interest rates.
Wholesaling is another feasible option for you as beginners, as it requires no down payment or any of your personal capital. You can save up what you attain from wholesaling and use those funds as a down payment to buy or hold a property.
2. What asset and investment strategy is right for you?
There is a huge pool of investment opportunities in the real estate industry, however, it is on you to decide which one is the best and ideal choice for you. This huge pool includes- rental properties, buy and hold, real estate wholesaling, fix and flip, REIT’s, etc.
Once you have decided on your strategy, it becomes easier for you to pick the real estate property you wish to invest in. Real estate experts advise amateur investors to invest in cheaper and easy to manage properties. A small tip for you is to invest in properties that are promising and are in continuous demand among buyers and tenants.
3. How would you rank your understanding of the real estate market?
Many real estate investors fail to recognize the importance of market analysis. Whether they lack the skills and knowledge to complete the market analysis or just don’t understand the benefits, market analysis is an undervalued asset in real estate investment. In reality, the market analysis is the most important element in evaluating a real estate investment. The market analysis forms the base for every calculation and decision that follows. So, thoroughly researching and understanding the market is crucial to good decision-making.
For instance, the location of the property. It plays a major role in determining whether your investment would get you profits or not. Because it will drive the performance of your property. It can affect the rental expenses, rental income, cash flow, appreciation rate, etc. In order to know which location to choose, you need a thorough understanding of the real estate market. After all, you do need a higher ROI on your investment, don’t you?
4. What is your risk tolerance?
All investments come with a risk factor with them. So, even real estate investments have a certain degree of risk on them, however, you are the one who should know how much risk you are willing to take before diving in. You also need to recognize that risks in real estate vary.
An example could be you want to invest in flipping properties. These are the riskiest ones because here you wish to sell that property back in the market at a price that is high enough to recoup your initial investment and make the kind of profit you are looking for. Now if the market goes haywire, you lose your profit margin in a fraction of seconds.
5. Where and when can you spot good investment opportunities?
We have saved the most crucial question for the last one. Now that you have enough money to afford real estate investments, know what strategy meets your needs the best, have a clear understanding of the real estate market and have also decided where you wish to invest, the question arises, where and when to spot good investment opportunities in real estate?
You can go visit the Black Horse Realty website to spot a property that can yield you great returns. Connect with us and invest in a property that best meets your needs and assures you of higher returns.
Connect with me and let’s see how we can convert your dream into reality!