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New Year, New Real Estate Investment: Five Tips for First Time Investors
It’s almost that time of year again…time for New Year’s resolutions. Many include losing weight, breaking a habit, getting to bed earlier—but there are some that are much more strategic, like investing in real estate! For first time real estate investors, the new year can be a great time to throw your hat in the ring. However, it’s important to be prepared in order to ensure you’ll make a profit. Here are five great tips for first time real estate investors:
Be financially prepared
Some seasoned investors say you can never truly be prepared for the world of real estate investments. And while that may be true to some degree, there are things you can do beforehand with your finances to ensure you’re in the best position possible to purchase an investment property. First, now would be the time to consolidate or eliminate as much debt as you can. This will free you up for a lower interest rate and more cash flow if needed. Taking it another step further, be mindful of your credit score—if there’s room to improve it do that now before you seek out investing in a property. You should also save up for a sizeable down payment if possible. This will lower your monthly payments, help with insurance, and reduce overall risks with the investment.
Do your homework
Being a homeowner, and a real estate investor are very different. If you’re investing in a property, whether commercial or residential, in order to increase income being brought in, you need to look at this as a job. So do your homework. If you’ve never been a landlord before, research what it’s all about. What will be required of you, or even expected? Having this knowledge beforehand, and chatting with some experienced investors or landlords, will set you up for more success.
It can be easy to want to dive right into the deep end and snag that huge investment property you feel you can’t miss out on. However, it can make much more sense to reign your ideas back a bit and start on a smaller scale for your first real estate investment. This will give you the time to get your feet wet and learn the ropes before taking on a bigger opportunity. In fact, most real estate investors start out small, and then turn their smaller deals into a big deal! By starting smaller you will understand the process much clearer before investing such a large amount of money and time.
The location can make a big difference
Many investors want to remain close to their home so they can be “hands-on” with their property, and there to manage it in person when needed. This can be a great strategy, and works for many, however it may close the door on some seriously good investment opportunities. By opening up the areas you’re willing to invest in, you may find some up-and-coming neighborhoods or city centers that could be eventually give you a huge ROI. This is where time and research come into play and teaming up with a good agent who’s experienced in this type of purchase.
Have the mindset of a business owner
If you’re investing in real estate for profit and longevity, its crucial you adopt the mindset of a business owner. Start off by creating a business plan. Look at this process as an investment into your future and set clear goals and objectives. You should be striving to get as much profit back as possible. So, laying out your plan will keep you on track during the process. And any good business owner knows they need to look at their numbers before the deal. What kind of return do you want? What is the cash flow quotas each month, what are the expenses and how much can you truly afford before you get a tenant? All these things should be addressed during the planning stages.
So, if you’re ready to kick off the New Year by investing in real estate, be sure to follow the above tips and seek out mentors/partners in the real estate industry that have your back. With the market predictions for 2023, now can be a good time to invest if you have the means.
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