When it comes to investing in real estate, most people think of buying a piece of property and hoping it will increase in value. While this works for some, most of the time, this doesn’t work. You’ll find that investing in real estate has some hidden costs that are easy to miss, or you’ll find yourself in a real jam when something goes wrong and you can’t move fast enough to sell and get rid of it. But we’ll show you how to invest in real estate and do it right.
So keep reading, be inspired, and make the max out of your investment. With the real estate market expanding, it’s a smart idea to take on real estate investing in a limited-risk capacity. And here are real estate investing for beginners that will hopefully get you started right!
Use a Real Estate Agent to Find the Best Properties
A good real estate agent can save you a lot of time and money while you are looking to buy a property. With a real estate broker, you can:
- Get pre-approved financing;
- Know where to look for properties that are likely to be foreclosed and how to bid on properties without having to worry about bidding on a house that is already owned by someone else;
- Know the neighbourhood and current conditions of a property before you place a bid on it;
- Get a free market analysis from a real estate broker (even if you’re a beginner, you should understand market analysis!).
Besides, no matter what state you are operating in, each has particular rental regulations that landlords and tenants must follow. And this is another area where the help of a real estate agent would be helpful. So, before purchasing your first property, research your city’s rental regulations and find out what kind of rental regulations you must abide by.
Ask your friends and family to find a good real estate broker in your area. You can also check ofirio.com to find great properties and listings for sale or rent. Don’t settle for a real estate agent, especially one using a “buy and flip” model to make money. The agent you hire should make you feel like you’re on an adventure together and that you’re partners as you make money and build wealth together!
Buy in a “Build-Up” Neighbourhoods
When you buy a property in a “build-up” area, you can see the “new development” happening in that area. Therefore, buying in “build-up” neighbourhoods is a good idea. As a rule, new developments are small, so you can buy a property at a relatively low price. In addition, as the new development matures and grows in size, the prices of real estate objects in the area are also expected to go up. So investing in a property in an area with “build-up” neighbourhoods can be very profitable!
Photo by Jason Wang on Unsplash
Know Your Closing Costs
No matter what type of real estate deal you are interested in, you should first become familiar with all your closing costs before purchasing a property. Otherwise, you may end up in a situation where a few months after you close on your property, you find out that there are some additional costs that you have to pay. The typical closing costs for real estate transactions are:
- 3% to 5% down payment;
- Mortgage insurance;
- Escrow account for property taxes;
- Title insurance;
- Legal fees;
- Mortgage broker fee.
If you’re looking at an investment property, you’ll want to use your down payment to make improvements to the property that increase its value. Ensure that your broker or lender knows you are only interested in investing in income property. If you only buy investment properties, you may be forced to pay higher rates of interest
Make Sure You Have a Good Loan for Your Property
Just because you have a good down payment doesn’t mean you should invest in a property that is not loanable. It’s also important to keep in mind that your personal loan on the property cannot be higher than 30% of the property’s value. So if the property’s value increases, you could become more than 30% over the value you’ve expected to cover. To reduce the risk that your loan could go above the 30% limit, working with a real estate agent who knows all of the market trends/ dynamics and how to finance a property is important.
Final Say
Real estate investing isn’t for everyone but hopefully, this real estate investing for beginners guide is helpful. If the real estate market is heating up, you could invest at the wrong time. Therefore, take your time to investigate a market before investing and ensure you aren’t over-investing and jeopardising your financial health. Before you invest, get a good real estate agent and make sure that you do all the research on any property that you’re interested in purchasing! Investing in real estate can be a great way to create wealth. Even when the market is heating up, you can still find deals on undervalued properties. Invest in properties with a long history of high returns, and you may be able to achieve above-average profits.
Photo by Nathan Van Egmond on Unsplash
