Real estate investing doesn’t come with a handbook, and there are tons of little moving parts that need to come together to make your investment worthwhile. The ultimate goal is to make a profit that will cover the purchase of your property, taxes, repairs or upgrades, maintenance, and the risk you assume when buying a property.
And, when it comes time to sell, you’ll also need to cover your real estate agent fees, which are usually around 6% of the final selling price.
There’s no guarantee when it comes to real estate investing, but you can increase your chances of turning a profit. Here’s some of the best real estate investing advice from fellow investors that can help you find your footing in the industry:
Investigate the Market
Don’t underestimate the power of research. Real estate investors need to explore their markets carefully, ideally for several months before you’re ready to make a purchase. Look at what homes are listed for versus what they’re selling for, what buyers are interested in, housing demands, market trends, consumer spending, the local economy, and other factors that may affect the real estate market.
Your real estate agent can create a comparative market analysis that gives you this information in detail, which you can use as you start looking for properties to buy.
Investing in real estate isn’t a decision to take lightly. You want the best chance of not only making back your investment, but also turning enough of a profit to help finance your next one.
Diversify Your Real Estate Assets
There’s more than one way to invest in real estate.
Many investors like to buy properties on the cheap, fix them up, and sell them quickly for a profit (also known as house flipping).
Others will purchase single-family homes or multi-family residences for residual income and either act as a landlord or hire a property manager to take care of the rentals.
Many investors prefer multi-family properties because if a tenant leaves, they don’t drop to zero percent occupancy and still have money coming in. Other experts say that single family homes are the way to go. They’re in high demand, plus they tend to appreciate in value over time.
However you choose to invest, remember you’re not limited to a single income source. You may want to mix up your assets, at least in the beginning, to see where your best chances are. Once you get a feel for the industry, you may choose to focus on a single type of real estate investment to make a higher profit.
Build Your Professional Network
In just about every business, success largely depends on who you know, and real estate investing is no different. Investors should prioritize building a strong professional network of real estate agents, lawyers, referral sources, contractors, and even other investors that can help you grow your business.
Also, you can join real estate investing groups in person or online to get expert tips and advice. Maintain a student mentality and learn as much as you can about the process.
Don’t Underestimate Maintenance Issues
Before you purchase an investment property, go over it with a fine-tooth comb to uncover potential problems you’ll need to address. But once you purchase the property and make repairs, you’ll need to maintain it on an ongoing basis to prevent future issues from occurring.
Don’t underestimate small problems, especially if you have tenants in the property. Minor issues can turn into major expenses if left unchecked. Make it a point to inspect your properties each year so you don’t end up spending your profits to fix them later.
Work With a Local Real Estate Agent Who Knows About Investing
One of the biggest favors you can do for yourself is to be selective when choosing a real estate agent. Your agent should be local to the market in which you want to buy, as he or she can give you the best insight into what the market is doing and how to leverage it to your advantage.
Ideally, your agent will either have experience working with investors or will have their own investment properties. Their niche experience will deliver more benefits to you versus a jack of all trades agent.
Start your search for a local, investor-friendly real estate agent with Clever. Our Partner Agents are full-service, top-rated agents in their local markets with experience in unique situations, like real estate investing. Your Partner Agent can not only help you identify investment opportunities, but also help with the home buying process at large. And, in select states, you may earn a $1,000 Home Buyer Rebate simply for working with a Partner Agent.
Reach out today to connect with Clever and start investing in real estate with confidence!