Real estate is one of the most lucrative investments you can make. But it’s also an extremely complicated and risky market, so you need to be smart about how you go about investing in it. If you’re thinking of dipping your toes into the real estate pool, here are some questions to ask yourself before getting started:
Should I buy a home to live in or to rent out?
If you want to live in the property, it is important to make sure you can afford to buy a home that will allow you to have enough space for your family and your lifestyle.
If you plan on renting out the property, ask yourself if this is something that interests you. If so, how much time would be involved in managing an investment property?
How many properties do I need to have before I can quit my job?
It depends on your goals, how much money you have to invest and how much time you can devote to your real estate investments. If your goal is to quit your job in the next five years, then it might be a good idea for you to have at least six properties under contract before going full-time with real estate investing.
The best answer I can give is that it depends on what stage of life you’re in and what size bank account (or savings) will allow for this type of investment opportunity. If you’re just starting out, it’s better to have one property than none at all because once the deed is signed over and the keys handed over, there’s no going back on this decision!
What’s the best property type to invest in?
There are many different types of real estate to invest in. Each has its pros and cons, which we’ll discuss below. The most common are:
- Single Family Home/Duplex/Triplex
- Apartment Building/Condo Complex
- Townhouse Community or Planned Development (PDA)
- Industrial Property Types (Warehouses, Offices, Retail Stores)
Where do I find the best real estate leads?
As a real estate investor, you need to be looking for the best leads. There are several ways to find them:
- Listings on other real estate websites or apps
- Listings on social media (Facebook, Twitter and LinkedIn)
- Listings from friends and family. You can ask them if they have any leads for you.
- Listings from real estate agents. Some agents might give you their client list if there is one that matches your investment profile.
What are the best ways to build relationships in the real estate business?
The best way to build relationships in the real estate business is to attend real estate seminars, join a local or national association, and establish a network of agents and brokers who can refer buyers and sellers. It also helps to read books and magazines on investing in real estate. Social media sites like Facebook are great ways to connect with other investors as well!
How long will it take to make money on my investment properties?
How long will it take to break even?
Once you’ve purchased a property, there are four main factors that will determine how long it takes for your investment to start making money.
- Time until you pay off the mortgage loan on the property. This can be anywhere from 5–10 years depending on your initial down payment and interest rate.
- Time until you build equity in the property. While this varies greatly by location, some markets show a significant drop in value after just one year while others take longer than five years before seeing any appreciable drop in price (and therefore, increase in equity). This is especially true for properties located near major urban centers or tourist destinations where prices tend to fluctuate more quickly due to seasonal fluctuations.
- Time until you sell the property at an amount above what was paid for it initially (whether that’s through sale or refinancing). Depending on how well the market is doing at different points throughout time, this can range anywhere between 3–5 years after purchase depending on whether there are any economic downturns while waiting for sale or refinance options become available again later down the line
Being careful and strategic about real estate investing is essential.
Investing in real estate can be a great way to make money, but it’s important that you’re careful and strategic about your approach. If you’re not careful, you could end up losing more than you gain.
Here are the questions that we recommend asking yourself before investing in real estate:
- Do my finances allow me to get started? This is an obvious question—you don’t want to put so much money into a new venture that it leaves little room for error. You should also have enough savings set aside for any unexpected expenses during the process (like legal fees).
- Will I be comfortable with my partner or partner’s partner(s)? It may seem like an overblown concern at first glance, but having someone invested in your success will make all the difference when things get tough—and they will get tough at some point!
Conclusion
So, you see, there are a lot of things to consider before investing in real estate. But if you take the time to learn about all this stuff—and do your research!—then you’ll have a much better chance at finding success. And remember: ask a lot of questions! People who don’t know what they don’t know can make some pretty bad decisions when it comes time for their next investment property purchase.
