Knowledge Is Power When It Comes To Your First Property Investment
For those who are experienced when it comes to property investment, the profits can be very lucrative, but if you're inexperienced and purchase real estate without the knowledge you need in order to succeed, it can be a disaster. First rule of thumb, never purchase real estate with cash, never purchase real estate with money you're going to need soon and never purchase real estate assuming that the mortgage can be paid by renters. Besides this basic rule of thumb, there is a lot of other knowledge you need to know before you actually purchase your first piece of real estate investment property.
Before signing on the dotted line on any real estate, make sure you have as much knowledge as possible. You'll need to know about the market, real estate investing in general, real estate laws and regulations in your state, as well as knowledge about the piece of real estate itself including its history, zoning, and condition.
For your first property investment try to think small. Setting yourself for failure by purchasing too big a property or one that's too expensive can only be a stressful, frustrating and a financially draining situation. Make sure that you can afford the property, as well as have a plan as to how long you're going to keep it, what you're going to do with it as far as repairs or rentals, and what it's worth on the market today, five years from now, and ten years from now. Real estate as an investment is usually something you're going to hang on to, of course, for those who are really good at it, flipping property is one way to make cash quickly.
If you intend to flip your real estate, make sure that you're thoroughly knowledgeable about the market, what kind of repairs you need to do, and how much it's going to cost. Time and money is what it takes in order to flip a property correctly. Basically, you're going to need know what the market is up to. Well enough to know that if you do certain repairs or renovations on the property it's going to be worth a certain amount of money. You're gambling that the cost of repairs will come under the final retail value. Remember, after its repaired or renovated, you need to sell the home and according to the market conditions it will either sell quickly, or take a very long time. If it is likely to take a while, you need to be able to sit and wait it out until the market improves and you can release your money.
If it's a rental that you're considering, make sure you're thoroughly knowledgeable on your state's laws and regulations concerning rentals. This may mean that you need to know rental laws, get inspections from local authorities, and of course, know the local renting market. Never purchase a property for a rental unit, where you need to depend on the rent to make the mortgage.
Your first property investment needs to be researched thoroughly. Make sure that you're thoroughly aware of the financial aspects, the market, and the real estate itself.
One thing to be aware of is that while most people buy real estate to draw an income from and to watch it increase in value, there are other avenues that can be explored. You may find that you have a flair for finding properties for other investors or developers. In this way you will be given a finders fee. You would have to negotiate with the investor what that fee would be, but some people have started their foray into real estate in this manner. If your negotiation skills need work and practice then do the work and get the practice. The art of communicating with other people will not only stand you in good stead for doing property deals, but will help you form better relationships with people in all walks of life.
Some people become investors in that they put up the money to buy a property. They possibly do not have the time to go out and find properties themselves, but are willing to put up the funds necessary to buy a property which meets their requirements. In order to meet people like this, you will need to make yourself known. You may need to seek out real estate investment clubs, property networking clubs. You will then need to talk to the people there and start forming relationships. It is probably fair to say that real estate investment is as much about finding a good deal as it is about finding good people to work with and a good team supporting you. Give attention to all these facets.
Finding other like minded individuals may lead you to undertaking what is known as a Joint Venture. This is where you get together with another person or a group of people and pool your resources to buy a property. You would all need to draw up a contract that shows who put in how much money, how the rental income will be split and how the proceeds of selling the house will also be split. Make sure that you like the people who are undertaking a joint venture with; as all of us know it is not much fun working with people who you do not like. When choosing people to do Joint Ventures with, meet them for coffee. Do not even discuss real estate. Talk about every day things such as soap operas, holidays, food and the like. All the time watch how they interact with other people; are they polite, do they get annoyed easily, are they laid back? Your gut instinct will tell you whether a Joint Venture with this individual would feel right.
