If you are new to real estate investing, there is a LOT to learn. Unlike investing in the stock market or mutual funds, the success of a real estate investment largely depends on you; what property you purchase and how you manage the property once you own it. Real estate is a large capital investment, so before you write that first offer, it’s helpful to learn as much as you can. These 4 basic tips will give you some direction as you learn about investment opportunities.
1. Location, Location, Location – One of the most important aspects of a successful real estate investment is the location. The right neighborhood, street or community can make thousands of dollars of difference. This will require a little bit of driving around and a lot of networking. Find investors groups that will provide honest feedback. Research price ranges and track where the bulk of sales are being done in your area or the area where you would like to invest. Large cities are a great place to start and if you are just getting started investing, the edges of the city might be more affordable.
2. Consider Wholesale Properties – Watch for properties listed below market value. Foreclosure lists, courthouse auctions and short sales are just a few of the options to buy below market value. Many websites advertise the foreclosures/auction homes. If you’d like to learn more about wholesale properties, it might be worth your time to enroll in a class at your local Real Estate school or online. The instructors will undoubtedly teach you a lot about finding properties, but you will meet other like minded individuals that you can provide you with their insight and knowledge as well. Networking is the name of the Real Estate game.
3. Understand the Tax Advantages – Before you invest, visit your tax professional and learn about write-offs, business taxes and tax breaks. Figure these numbers into your plans. The point of investing is to create wealth, so make sure you have all of your ducks in a row when searching for properties. Plan for the ups and the downs. Learn everything you can about the tax advantages and how to adjust your income come tax season; what you can write off, what you can’t, how long you have to be in a property to benefit you, how to sell 1031 to avoid a hard tax hit, there are SO many things to remember and know. Do your homework.
4. Manage Your Credit – Leverage is important in real estate investing. Determine your ability to gain loans and correct any mistakes in your credit report. You can get a free credit report every year. Figure out what you have and what you can fix. If you are feeling lost about your credit score, speak with an advisor at your bank or a credit expert at a mortgage office.
Real estate investing has the potential for great profit. Do your homework before jumping into the market and you can position yourself to make the right decisions for your portfolio. There are a TON of resources out there to learn from and lots of Facebook groups to join.
If you have any questions, feel free to leave them in the comments section or call me, Kyle Bender at 704-942-6316.