5 Ways To Thrive In Real Estate
Real estate is quickly becoming the most popular form of investment, with purchases rising over 25% in the last five years. It makes sense, since more savvy investors are looking to thrive in the property market, diversify their holdings, and protect themselves from increasingly destructive financial swings. Maybe you’ve decided it’s time for you to join this group of savvy investors and enter the real estate market too, but you’re not sure how to reduce the amount of risk you’re potentially exposed to. Well, there are ways to thrive in a real estate market, and these five steps will help you make the right decision for your financial future.
- Determine Your Investment Strategy
Before you dive in and buy an investment property, it’s important to assess what investment strategy will work best for your future goals. Sure, property investing can be a powerful wealth-building tool, but it can also be a difficult burden to liquidate if not done right. If you haven’t done so already, you need to get a clear picture of your personal finances, and have an overall idea of what your personal and financial future will look like. Some questions to help you gain clarity might be:
- Where do you want to be in two, five, or ten years?
- Where is your ideal location to live?
- Do you want to start a family?
- Do you want to travel? Do you want to have a solid base for a family?
- Are you satisfied with your career(s), or do you see a sea-change in the future?
- Are you comfortable with the idea of commitment and the responsibility of maintaining another asset?
Some other relevant questions to determine what investment strategy might work for you are:
- What investments do I currently have, and what do I want to acquire in the future?
- Do I have retirement savings?
- Will liquidity be an issue for me? Do I need fast access to cash?
- Will I be able to be in this long-term, and be comfortable with an unpredictable cash flow?
- Do I expect my investment property to supplement my retirement?
- Do I expect the property to provide income, or do I want long-term capital gains?
Once you’ve painted a clear picture of your financial goals, it’s best to seek the guidance of a property investing specialist or, in some cases, a financial advisor. These professionals can offer strategic real estate investment advice to put you on the winning foot.
- Look for Affordable Real Estate
It’s very easy to over-commit when entering the real estate market as an investor. So it’s important to maintain a level head to avoid overspending when it comes time to buy a real estate investment. Using the newfound understanding of your financial standpoint, be sure to buy a home you can easily afford so you don’t make things more difficult for yourself than they need to be. To assist in keeping within your budget, consider older existing homes as well as the new. While you might not like a previous homeowner’s decorations, these are superficial and can be changed both easily and for a far cheaper price than a new home!
- Buy in a Prosperous Location
As every good listing agent will tell you, it’s all about your investments’ location. Buying profitable real estate is largely about doing your due diligence and knowing where the good locations are. A house that’s located on a busy, noisy street may be less enjoyable to a future homeowner than one situated on a quiet, secluded cul-de-sac. Be sure to take a good look around and see if the neighborhood is suitable, well maintained, neat and tidy, and has other houses that display a sense of prosperity. Avoid simply falling in love with a property. In many cases, the investment potential will be quickly diminished by the loud neighbors next door or the school across the street.
- Consider Nearby Services
If you’re going into investment property, then remember that your main reason for buying is to make money. Educate yourself as much as possible on a property and its neighborhood or suburb, and consider services and desirables that, in many cases, you yourself would look for in a piece of real estate. Consider the availability and distance to the following when looking at a property:
- Services: What services are close by that may increase the desirability of your property for renters or future buyers? Health, shopping, employment, etc.?
- Schools: Many renters and buyers look for the availability of schooling for their future family. What does your potential investment offer in terms of schooling?
- Transport: Access to transport is becoming more of a consideration, as populations swell and drive more cars off the road. Is parking available? Are there buses or trains close-by? How easy is it to get to an airport? Is the airport domestic or international?
- Desirability: How desirable is the location? Are the streets lined with trees? Are the yards well-kept? Is it a newer or older neighborhood? Is it busy or peaceful?
Services such as these add value to an investment property and will make it easier to sell at a profit later on.
- Look for Inherent Investment Potential
As an investor, you want to enter into a real estate venture with the mindset of “profit over pickiness”. This means that it’s best to leave the idea that this could be your “dream home” behind, and instead treat it like the investment that it really is. Keeping this in mind will help you avoid making rash decisions to extend yourself beyond your financial means for the sake of a property you love. Looking beyond the face value of a property and keeping your budget in mind will have you acting more on the side of logic, avoiding the mistake of purchasing a “white elephant” which could leave you deep out-of-pocket. Consider how your purchase will look from a buyer’s perspective, and assess if it will be easy or difficult to sell again later.
Time to Watch Your Investment Grow
Following these five tips for entering the real estate market will help you thrive and avoid making costly emotional decisions for your future. Preparing yourself for success requires thoughtful planning and diligence, and the effort you make now will pay itself back tenfold in future. If you’re in the real estate game to thrive, then make sure you tend to your roots by preparing for your success.