Do you love investing? If your answer is yes, then most of your money must be in the stock market. However, don’t forget, diversifying your portfolio is a prerequisite of successful trading. Now, have you thought about real estate investing?
Before you say no to it because it requires upfront investment or a lot of work, give it a try. Real estate has what it takes to be lucrative. Getting reliable internet plans is necessary before getting into this business for a proper online research. Like lots of people who have become millionaires, you can expand your investment horizon, too. However, how can you make real estate ROI fruitful?
Try these 7 tips:
Tip 1: Stay Away From Hot Markets
When it comes to real estate investing, follow this rule of thumb: keep away from the hot markets. You will see a lot of real estate investors bragging about the rising property rates. When you buy at the top of the market, you are actually at the risk of losing your money.
Tip 2: Never Be Short-Sighted
If you want to achieve the best return on investment, make sure you are in it for the long run. Do not be lured by the short-term cash rewards. This will make you forget the bigger picture very easily. Never base your business decisions on short-term gains either. If you want to get the best return on your investment, keep a long term vision. Cash flow returns are important but the long term rewards are more important.
Tip 3: Buy a Rental Property
Want a monthly cash flow from your real estate investment? Purchase a home and rent it out. You will have to buy a house with a monthly mortgage payment, property tax payment, home insurance, etc. all combined lower than the rent. Buy a property in a location where rents are high. Alternatively, you can buy single-family homes that already have tenants and cash flows.
Keep in mind, there are a few downsides of owning rental property. First things first, you will need many cash. Apart from the down payment, you will have to bear the maintenance expense also. The second downside is dealing with the tenants themselves. It is very crucial to screen renters before letting them in. Don’t want to handle all this fuss? No problem! Let the property management service oversee your property. It sure involves a lot of work but once this semi-passive income starts rolling it, nothing can beat the feeling.
Tip 4: Be Clear About Your Financial Goals
This is extremely important. You must first determine your financial goals. This includes things such as cap rate, ROE, cash flow, etc. Figure out what’s important to you. Is it the appreciation of the property or the current return? Come up with the net worth of the property and decide what path you want to take to make the most out of this investment.
Tip 5: Start Flipping Houses
Hands down, flipping homes risky but if you do it right, it’s extremely rewarding. Now is actually a good time to start flipping homes. You buy homes under their market value, fix them and sell them for a profit.
But how can you be successful at this? You must first find the bargain homes. It would be great if they require fewer repairs otherwise, your work is going to increase. An ideal home is the one that needs limited repairs. It’s up to you how aesthetically appealing you want it to look. Once it’s ready, sell it for profit.
Be prepared because the home may not sell fast or at the kind of profit you are expecting. This calls for paying special attention at picking the location, the price and the repairs it requires. Once you get a hang of it, you will find it among the most valuable investment.
Tip 6: Consider Real Estate Investment Trusts
Don’t want to stick your hands in real estate quite so much? Then take real estate investing in the stock market. A trader online would understand what this means. You can invest in REITs (Real Estate Investment Trusts). They allow you to invest in real estate without being involved in it. It’s actually a fund that allows you to invest real estate niches be it bonds, stocks or other mortgage instruments.
REITs are of 3 types: mortgage, equity, and hybrid. Mortgage invest in mortgages, equity invests in properties and hybrid is a combination of the two. All these REITs offer great yield. If you are already into stock investment, you will find this easier.
Tip 7: Find Wholesale Properties
Real estate investment is kind of similar to stock market investment. You will have to search for the best deal. You must understand it is not wise to buy stocks at a higher price especially if you want to hold them for a long time. Follow the principle thought by Warren Buffet. Get greedy when the rest of them are fearful. Don’t be afraid to buy stocks that have beaten down. You could make a fortune out of them once they turn around.
Do the same with real estate investing. When buying properties, don’t pay the full price. Instead, look for wholesale properties that are offered at a discount. These properties require some work no doubt. Do the math and figure out if the investment is worth its final selling price once it’s renovated.
If you are investing $20,000 in a property, you can always add twice that amount to its selling price. This is why real estate investing is such an attractive option.
Sure real estate has the potential to offer you fabulous returns. But that doesn’t mean it is everyone’s cup of tea. Lots of people have actually bankrupted themselves by putting all their money in real estate. Before you start, make sure you know what you are involving yourself in. Real estate is not a get rich formula. To enjoy the most return on investment, you will have to stick to these tips. Nevertheless, you will be glad to hear there are more than one ways of investing in real estate.