The appeal of real estate investment is rather obvious to anyone who’s ever taken their time to study its benefits; an attractive investment opportunity that’s always varied and rarely dull, the real estate market is simply too appealing for many investors to overlook. There’s a chance you’re drawn to real estate by the prospect of diversifying your investment portfolio or exploring its competitive, risk-adjusted returns. Perhaps you’ve always dreamed of owning an investment property, and a few more besides. Whatever the attraction, it’s important to acknowledge the hazards of such an investment. Time-consuming and all-encompassing, the real estate market fluctuates on a regular basis; could you be the investor to tame the trends?
With plenty of opportunities for investors, the real estate market takes some time to navigate. You would do well to pay attention to these dos and don’ts along the way.
Do your research
To make successful, profitable investments it’s essential to approach the real estate market with caution. Can you be sure what you are getting yourself into? Have you been paying close attention to the local real estate market and the investments that others have made in the area? Take your time to research local neighborhoods, crime rates, schools, environmental factors, and household incomes. Where would you be better off investing your money? Before deciding anything, you should also visit properties and meet with tenants as you consider your options; the most successful investors are those who handle their business with care.
Don’t go in without a plan
So, what’s your plan? What are your real estate goals, and where are you headed? Do you have a budget in mind? It’s imperative to have an endgame in sight and to understand the financial implications of the investment you’re about to make. Refine your investment strategy; how long is your money likely to be tied up, and where is it coming from? Investments from lenders, bankers, and partners will enable you to protect your finances. Speaking of which, have you got your finances in order? Get to grips with your income, outstanding repayments and expenses before complicating matters with further calculations. Oh, and always plan for the worst to cover every eventuality.
Do listen to the advice of other investors
As part of your real estate education endeavor to speak to those in your position, as well as investors that may have ventured before you; what mistakes have they made, and where have they prospered? The world of real estate is a competitive one, but that doesn’t mean you should fear approaching other entrepreneurs and property owners for advice or support. North Carolina native and real estate expert Jan Berkowitz has spent some sixteen years working in the industry, and can no doubt identify those nasty surprises awaiting investors should they fail to thoroughly prepare their plan of attack.
Do take your investments seriously
A real estate investment is like running a business; it requires liability protection, appropriate bookkeeping, and insurance to ensure that you’re covered should the worst happen. Even the most seasoned investors sometimes make mistakes and lose money on a poor decision. Treat every decision as if it’s the most important one you’ve ever made, and err on the side of caution when it comes to involving other parties; do you really want to hand over the control of your investment to someone else?
Do take your time
To avoid expensive mistakes, it’s essential to take your time; don’t choose to do calculations late at night, or between tasks. Could you say that your mind, or heart, is really on the job when you’re distracted? Set aside evenings and weekends when you can be focused and ready to make big decisions; consider those opportunities as your real estate homework and continue the research you began when you decided to make your first investment.
Don’t ignore your gut instinct
Real estate investment is as much about gut reactions and deep-seated feelings as it is research and prior planning; don’t disregard your gut if it’s telling you an opportunity is too good to be true, or that a property is too attractive to ignore. Listen to the results of property inspections. In fact, don’t consider a property unless it has received, and has passed a thorough inspection. Similarly, try not to find yourself drawn to properties simply because they are cheap. That won’t always equate to value for money or the biggest and best investment returns. Could you afford to sleep on this decision for one more night? Your doubts may just become a little clearer, if so…
Don’t lose sight of what you’re doing, or why
When it comes to real estate investment it can be easy to become complacent; surely you’re only in it for the money? However, try not to lose sight of why you became interested in property in the first place. Take your time to appreciate opportunities, and to make the most of your experiences – both good, and bad. By all means, calculate your expenditure and overheads, and endeavor to move from one property to another. But every now and again take a second look, consider your emotional attachment to a property, and listen to those around you. Real estate investment is risky, competitive, and consuming, but it’s also a privilege.
The bottom line
When it comes to real estate, it’s easy to be overwhelmed by facts, figures, and analysis; you might feel that it’s perhaps easier to let this investment opportunity pass you by. However, succeeding in real estate is all about identifying the best prospects and running with them, once you can say for sure that you’ve considered all of your options. And yes, real estate can be a tricky, risky business. That shouldn’t mean never taking the plunge, though – particularly if you’ve taken the time to secure your finances and future, and familiarize yourself with important buzzwords and legalities. The world of real investments is a daunting one, but it can also be incredibly rewarding. Where will your research take you?