Top Tips for Real Estate Investors

12 Things You Should Know Before Buying A House

Investing in real estate can be extremely successful, but it is definitely not free of challenges. There are a lot of technicalities within the industry that can get confusing if you’re not savvy. Despite studying for years to become a real estate investor, there are going to be plenty of things that school can’t prepare you for. It’s one of those industries where you learn on the job. From figuring out your finances to discovering how to run your own business, here are the top tips for real estate investors.

Tips for Real Estate Investors

If you’re considering taking a leap into the world of real estate, you should prepare for an exciting career that is full of surprises and risk-taking. Here are some top tips for you to take on board as you delve into the world of real estate.

Offer Virtual Tours

With the events of the past two years, real estate has moved into the digital world. Many property viewings are now held online, either via a video conferencing tool such as Zoom or through pre-recorded videos. As a real estate investor, offering virtual tours of your available properties will set you apart from the crowd.

Your potential tenants will be able to see each house or flat in all its glory. This is a much more interactive way to engage with your customers and go above and beyond to impress them.

Choose Your Area Carefully

As a real estate investor, it’s up to you where you choose to invest, and location is an important factor to consider. You don’t want to buy in an area just because it’s cheap. Extensively research multiple areas to figure out which ones are the most profitable. You want to buy real estate in areas that are up and coming so that there is great potential for future investments and finding great tenants.

It’s also important to research the competition within each area. If you’re considering residential or vacation rentals, think about how close the properties are to the local attractions. For business rentals, determine the demographic and the proximity to public transport or parking.

Before you commit to a final decision, take into consideration how each area is going to change. Are there plans to build a huge shopping mall right next to your potential properties? Is the area growing in popularity? Of course, it’s impossible to predict the future, but you can try your best!

Secure a Down Payment

Buying any property, whether it’s for personal or professional means, requires a downpayment. There are also more stringent regulations that you must cover before getting approved as an investor, and you will likely have to make a much large downpayment than usual. Unlike when someone buys a home to live in themselves, which requires between 3-10% as a deposit, you will need at least a 20% downpayment.

Avoid getting into large amounts of debt before you’ve even begun your investment career. If you have existing student loans or medical bills, consider paying them off before you buying your first property. This will make it easier for you to save up for your initial down payment.

Know Your Numbers

Real estate is very much about the numbers. Even if you hire an accountant or bookkeeper to help you out with your finances, you will still need to be clued up on this sort of thing yourself. At the end of the day, it’s your money. You need to be aware of how much you can afford to invest, what the returns are going to be, and how much tax you’re going to have to pay.

When calculating your numbers, remember it’s not just the initial down payment for your properties that you must take into account. Operating expenses, such as insurance, taxes, regular maintenance, and repairs on your properties will be anywhere between 30-80% of your gross operating income.

You can use this to calculate your margins. Be sure to factor unexpected costs into your finances to remain prepared for any emergencies, such as roof damage or plumbing problems.

Build a Network

Getting to know others in the industry can bring about new opportunities, whether you’re new to real estate or you’ve got years of experience. Attend as many lucrative events as you can and start to build a network of high-quality connections that can help to push your career forward.

Organize Your Insurance

Landlords require insurance. In order to protect your investments, you are best purchasing landlord insurance alongside your homeowner’s insurance. This will cover property damage, lost rental income, or tenant accidents caused by a lack of maintenance in any of your properties.

Figure Out Your Terms

As a landlord, it’s up to you to determine your rental terms and conditions. Once you’ve calculated your expected costs and researched the average prices of rent for each property within the area, you can determine how much rent to charge your tenants, and whether or not you’re going to include utilities in the monthly rent. The important thing is that you decide on your pricing prior to finding tenants so that you aren’t left to organize it when the bills start rolling in.

Stay Educated

Real estate changes year by year. As a business owner and investor, it’s important that you stay up to date on the latest industry news, changes in laws and regulations, and developments within your investment areas. This may be time-consuming, but it’s vital to your success. In order to do well as a real estate investor, you must regularly do your research to ensure you’re not breaking any newly-passed laws and you’re staying on top of the latest trends.

Being an investor is never going to be easy, but if you fancy yourself as a landlord, there’s no reason not to delve into the wonderful world of real estate as real estate investors. As long as you are prepared for the unexpected, you’re clued up on your finances, and you’re covered with the best professional and legal help, you will succeed.

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