Investing in real estate – guide for beginners -USD 0

Publish Date: 14-02-2018 06:00:24 | Contact name: harinarayan | Location: INDIA | Place: jaipur | 1 times displayed |

Many people believe they have a clear idea about real estate investing: it involves two people, namely the property owner and the renter or property user, who make a simple and fair exchange. If each of the parties fulfills its obligation meaning that the property owner must ensure the adequate living conditions and the property user pay the rent on time, everything works perfectly. Nevertheless, those who are going to enter this field must be aware that real estate investments are far more complex and risky, especially taking into account that a seemingly minor mistake could lead to significant financial consequences. If you fall into the category of people who strongly believe that risk taking leads to success or comes with great rewards, then real estate undoubtedly suits you. Just make sure that you do not make a single move without gathering the necessary information. Knowledge is power and real estate market fluctuations are real and dangerous. For the same reason, we created a useful guide to help you in this regard.

What you should know before investing in real estate

You do not have to be a genius to succeed in real estate but you do have to make the right decisions at the right time. Planning your financial goals, exploring different properties as well as performing a comprehensive financial analysis and making a clear distinction between the business of real estate and real estate investing should represent your main priorities. Even before you decide to purchase a property for the first time, you should set your expectations and financial objectives. If you consider that you need guidance, do not hesitate to contact a financial advisor. Speaking of properties, you have to dig deep in order to find a treasure, which means that you have to approach the selection process with seriousness and a critical eye. Do not just buy a property because it looks nice. Instead, take your time to assess the benefits of your purchase and yes, we are talking about the financial benefits. Moreover, you have to pay extra attention to sellers who tend to overestimate their property value. Do your research so you know exactly the fair price before closing the deal. Feel free to analyze maintenance records, property-tax bills, tax returns and much more in order to obtain an accurate estimation of expenses and income.

Mistakes to avoid before investing in real estate

As mentioned in the beginning of the article, when activating in the real estate field you can make mistakes that have the potential to ruin completely your financial projections. However, as a beginner, you might start making mistakes even before actually deciding to invest in real estate and handle 1031 real estate exchanges. First, acquiring extensive knowledge or at least, learning the basics is fundamental and you can use any means for achieving that goal, from reading books and listening audio tapes to attending seminars. This represents a great first step but too much research can easily become a distraction from your real financial objectives and prevent you from taking action in order to make those objectives reality. If you do not want to lose your direction, compile a short list of questions or short-term goals. Another trap you have to avoid is postponing. Many investors find themselves in the position of constantly waiting for a better deal to come and this negatively affects their evolution. You have to keep in mind something from the start: the perfect deal rarely exists. Thus, if you discover an attractive opportunity, do not let it slip.

Working with unmotivated sellers benefits you

A smart and efficient move that will save you great amounts of money is to incline towards sellers who do not seem motivated to control the result of the deal because they just want to get rid of the property. A motivated seller will never allow you to purchase the much-desired property for a convenient price; he will fight to direct the result into his advantage. You may ask the following question: how can I determine the motivation level of the seller? Well, the price says everything you need to know. Looking at the price fluctuations, if any, since the moment the seller put his property on the market, will give you a clue regarding his attitude towards the selling process. For instance, if the price dropped considerably over time, it means that you are dealing with a seller willing to accept a less convenient offer, financially speaking, in order to give you control over the respective property. We are fully aware that unmotivated sellers will not just come knocking at your door, which means that you need to “hunt’ them. You have several methods at your disposal, which refer to reading the local paper, letting people know that you are willing to invest in properties, attending open houses and exploring vacant properties for sale.

Popular ways to start investing in real estate

After investing in all the informative materials mentioned above, you are ready to invest in actual properties. At this point, you probably already recognized several types of real estate investments, which involve residential real estate investing, commercial real estate investing, industrial real estate investing, retail real estate investing and mixed-use real estate investing. The first category refers to investing in houses and apartments where families live. The main difference between residential real estate investing and other type of real estate investments is that it adjusts quicker to market conditions. The second category mainly focuses on office buildings. This type of investment implies multi-year leases, which could provide you a greater financial stability and protection from declination of rental rates. The third category can include industrial warehouses, manufacturing facilities, car washes and storage units for temporary use. Retail real estate investments refer to traditional malls, strip malls and shopping malls. In this case, the property owner receives a part of the earnings generated by the store. Mixed-use real estate investing practically combines two or more of the already mentioned categories. It refers to those buildings with several floors that interblend different purposes, like residential apartments, office space and restaurants.

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