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Choosing The Right Investment Property
Investing in real estate can be highly successful, or it can be a complete failure. As everybody knows, location, location, location is hugely important, but ensuring you deal with the right type of person is actually even more important. The sad truth is that you will find that there are some very unscrupulous people who deal in real estate. Consider those late night advertisements on television, where realtors promise to make you a millionaire, for instance.
You should never invest in real estate before having a few affairs in order. To get started, you will firstly need to have investment capital. Also, study the real estate market and get to know the neighborhood you are interested in.
Next, you must make sure your investment isn’t too risky. Real estate is never risk-free, but some have much higher risks than others. You might want to stay away from fixer uppers, private real estate funds, tenant-in-common options and real estate development. Invest in these options and it is unlikely that you will ever see a return. Instead, choose to have titles that are totally yours, on properties that are interesting. Of course, this takes a lot of research, analysis and due diligence. Stay away from properties that have to managed intensively or are otherwise time-consuming. Stay away from student rentals, vacation properties and bad neighborhood homes, for instance. What you want is a long term rental opportunity with tenants with a good credit profile. You will only be able to achieve this, however, if you also commit to being a really good and respectful landlord. All properties will have some sort of issue at some point, but this should be manageable so long as you deal with them quickly.
You could also look for REITs (real estate investment rrusts). REITs are popular because they are cheaper to get involved in, but the returns you will see are not as high either. Working with REITs basically means you invest in other corporations. This can be anything from a construction company to a theme park. You can find the value of a REIT on the stock exchange and NASDAQ. A REIT, essentially, is like a mutual fund that only looks at real estate. Before investing in a REIT, there are a few things to learn about. The economic conditions of the key holdings is one. Also, you should look into how the REIT has performed historically. You should also investigate their future plans. Looking into the REIT’s manager and what their experience is. Last but not least, consider what the real estate market looks like and how this could affect how your REIT will perform.