14 Jun 19 Amy Schmitt / home buying
Four Things to Figure Out Before Buying Your First Property
Barring unexpected downturns in the market, housing and real estate is one of the most reliable and profitable investments you can make without totally breaking the bank in the effort. But unlike investing in the stock market, making money out of real estate requires more than just watching the market and making smart (and sometimes lucky) choices. Buying property requires more savvy, and more specialized knowledge, than other investments, especially because it’s usually something you manage yourself as opposed to handing off to a fund manager. Here are some of the most important things to know before you make the leap.
Know the Market
Every housing market is different, and some are better than others when it comes to investment. There are a lot of different factors to pay attention to. As with any market it’s important to know the trends, whether prices are going up or down and what the history of the area looks like. But it’s also important to know more about the local economy, what employment looks like, what percentage the average earner is paying on their monthly rent, and more. This information can be instrumental in deciding what kind of property to buy – or whether to look somewhere else altogether.
Figure Out the Total Costs – and Profits
When buying a property, it’s important to be smart, and not just about the market, but about your costs and expected profits. As with any business, it takes time to earn a profit, and your expenses before than aren’t just the cost of the property, but include renovation, upkeep, utilities, and listing the rental space, and the rooms won’t all fill up instantaneously. In order to proceed sensibly you have to estimate your total costs and use that information, plus what you know about the market, to figure out where to set rent. Some investors use the one percent rule, but it’s not a one-size-fits-all option.
Get Familiar With Income Sources
Rent isn’t the only way to earn money on a property. You can install laundry machines or vending machines, exercise equipment, offer storage space, even set aside a larger room for events or classes and rent it out on a per-occasion basis. It all depends on the property.
Learn to Recognize and Ignore Bad Advice
There’s a lot of bad advice out there. It’s important to learn which advice you can trust and which to dismiss out of hand. If you’re flipping houses, for instance, renovation is actually fairly important. It’s also important to fix issues as they arise instead of letting future tenants get around to it themselves. In general, it’s better to be more proactive and not let things slide, as well-maintained properties are the ones that will both sell and rent at higher prices.
If you act with foresight and do your research first, you’ll be able to step intelligently into the market and start earning money from your properties before you know it. Once you’ve made your investments and finished your initial renovations there’s a lot less work to do – you can just sit back, sip on a cup of Mountain Rose Herbs tea, and watch the money roll in.
By: Craig Lebrau | Friday, 14 June 2019| www.realtytimes.com
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