Real estate has always leaned itself towards the world of investment. For many years the real estate market showed remarkable stability and growth, making it the preferred investment for many smart investors across the country. Over the past decade the real estate industry has seen the development of more properties then ever before and subsequently the development of more millionaires then ever before. All it takes to see the results of this trend is a few minutes of TV. Chances are if you watch for a few minutes you will be confronted with at least one show on home flipping and at least one guy trying to sell his get rich quick real estate program. The reality is that those programs aren’t really necessary, all investing takes is some education, common sense and timing.
Making the most from your real estate investment involves careful planning and an understanding of the market that you are dealing with, be it sales or long-term rentals. Each area of investment has their own particular concerns that should be taken into account before the initial investment is made. Starting with home flipping, first let’s realize that renovating and flipping a home is not as easy as they make it look on those TV shows. usually they are showing you the best case scenarios, crammed into a one hour minus commercials space. Flipping a home and renovating before sale takes a good amount of venture capital to pay for the renovations and to pay the mortgage while the home is listed. There are a lot of up front costs that need to be addressed and recognized before any project starts. Make sure that you have a good fix on what this project will cost and be sure to have a slush fund set aside in case things go over budget (as they so often do). You will also have to time the renovations in order to have the home listed at the right time. Different areas may have different “hot” periods, make sure you know when these are!
Buying a home as a rental property allows a bit more time to get things underway as the home does not to be sold as soon as possible. This will allow more time to get the home ready for tenants if the need is there. When preparing a home for rental it is essential to get everything in perfect working order. This protects you as a landlord in case the tenants break anything. Also, the nicer the place and the better condition it is in; the higher the rent you will be able to collect. Try to find a property that is in an area where there is a high demand for rentals and that offers good access to basic amenities. Location is important to renters as it is to home owners, so homes that are close to business districts and schools are popular. Finally, take time and interview your potential tenants. Don’t hesitate to ask for and check references. This property represents a source of income and you cannot afford to have tenants whose ability to pay the rent on time is questionable.