If you are looking to do something more worthwhile with your money than simply throw it into a savings account and let it stagnate, you have no doubt heard of the various advantages of investing in real estate. But if you don’t know much about it, it can be an incredibly daunting and confusing prospect. It is not as scary as you might think however, and even just some basic knowledge can be enough to get you started in the right direction.
With that in mind, here are five tips for your first real estate investment.
Make sure your finances are in order.
First thing’s first—before you can even consider investing in something like real estate, you need to make sure that your finances are all in order. This means more than simply being debt-free. You need to check your credit report to make sure that you are viable mortgage candidate, and you should have a good amount of money set aside for a solid down payment. Get in touch with a mortgage broker and have them help you decide how much you can realistically afford on a mortgage. And though you may be planning on renting the property out, don’t rely solely on that money to pay for expenses. Aim for profit rather than to break even.
Read up on real estate.
You will be able to work with real estate professionals every step of the way, but that does not mean that you do not have to know what you are doing. On the contrary, you should make sure that you have at least a basic background knowledge before even consulting someone else. This can help you to know that you are really taking things in the direction that you want to go, allowing you to form and make your own decisions, rather than depending on someone else entirely.
Treat it as a business.
Investing in real estate is a business decision, so you should treat it as a business. As stated, this starts with getting your finances in order and reading up on everything you can to do with the industry. But even beyond that, you need to be smart about every step of the process. Draw up a short term and long term plan for this business, and make sure that you stay on track as it develops.
Don’t try to do everything yourself.
This is a trap that a lot of new real estate owners fall into, and it can lead to immeasurable amounts of stress and grief. Get an electric submeter to monitor utilities, so that you don’t have to worry about that. Look into hiring an experienced property manager to take care of the everyday business of running the property. They will relieve the burden of repairs and tenant concerns that can really eat into your personal time.
Don’t quit your day job.
Eventually you may be able to devote your full energy to real estate, but for right now you should keep your day job and use this as a backup source of income. You don’t know what might go wrong, or if you might end up hating everything about owning property. Until you have been at it for a few years, keep your main career separate.