Being an investor in real estate is no different from being an investor in the stock market or a commodity. The only difference is that real estate is an asset that you can see, feel, and even enjoy. You can also use it to earn a decent amount of rental income month after month. Here are certain tips to help you become a successful real estate investor.
- Have a game plan in place
You must know your goals with every real estate investment endeavor. What do you want to accomplish and what are your steps that will take you towards these goals? If rental income is in your mind, you need to look for rental properties whereas you must have a plan to fix and flip if you are buying a house in a poor condition to make profit through its sale in future. Along with the plan, you should also have a schedule in place. Know the costs involved work to arrange the capital for your investment.
- Choose the location wisely
Buying a property is a big financial decision that puts you in debt for a long period of time. Experts say that you should prefer to buy the worst property in best location rather than buying the best property in the worst location. The rationale behind this thinking is that demand for property will be higher and its prices will appreciate faster in good location than they will in a poor location. Also, buy a property that gives quick and easy access to all modern amenities rather than a property in a remote location.
- Do not forget the 1% rule
The 1% rule is a golden rule for the investors in the real estate market. This rule clearly stipulates that you should stay away from a property if it is unable to give 1% of its value in the form of monthly rental income. For example, if the price of a rental property is $1 million, it should be able to bring in $10000 per month in the shape of rental income. Any less and you should treat it as a warning signal.
- Check your credit score
Credit score is as important for you as an investor as it is for an ordinary home buyer. This is because you will need help from lenders to finance your investment projects every now and then. Most lenders require a higher credit score from an investor who ordinarily does not buy properties to live in himself. If your existing score is less than satisfactory, it is better to work upon improving it before taking a plunge in real estate investment.
- Have a team of professionals in place
Real estate investment is a profession that demands teamwork. You cannot handle everything involved with buying and looking after your properties. It is a good idea to make a team with a good realtor, real estate attorney, and property manager to handle different jobs with any real estate investment endeavor. While the realtor does the gerund work and finds right properties for you, the real estate attorney sorts out legal hurdles while the property manager looks after the property and the tenants.