Many people buy a property with the goal of making it their home. But what about as an investment?
It's no secret that real estate can grow in value, and home prices continue to rise even when the economy is under pressure. However, there are some things to keep in mind when starting out to avoid pitfalls.
Read on for our guide on real estate investing for beginners...
Decide on Rental vs. Flipping
When you're shopping for properties for sale, decide ahead of time whether you want to rent out the property or fix it up to sell at a higher price.
With the rental option, you'll have to ensure all the right amenities are there for a tenant, such as extra bathroom facilities or a private entrance. You might also have to comply with local bylaws about renting units.
On the flip side, if you plan to "flip" a property, you should have your budget decided and focus on improvements that will increase its value. That way you can re-list the property and use the proceeds to start your next project. Flipping homes is risky if you aren't experienced and don't have enough time or money to devote to a property.
Buy in the Local Market
If you plan to buy a home for the purpose of making money, don't buy it in another region. That's because if you have tenants you will need to hire a property manager to take care of any repairs or other tenant relations.
When you buy local, you can visit the property without a long drive. Buying local also means you'll have a better idea of what comparable properties in the area are selling for. A real estate agent with a track record of success in your town can go a long way in helping you secure the best deals. If you decide to buy, make sure to purchase your property with Applecross real estate agents and Realtors.
Use Cash Whenever You Can
This may not apply to all first-time real estate buyers. However, the truth is that taking out a mortgage means taking on debt that will add additional costs.
If you're looking to buy an investment property (one that you will use to generate income), then consider making the purchase in cash. That way you're not taking out a costly second mortgage to finance a deal.
Pay and Stay
Buying a home that you plan to live in the long-term can also be an effective strategy, as homes generally appreciate in value. However, there's more to consider when you're buying a primary residence.
You should find out how much the property taxes are on your home of choice. The upside is that you may be exempt from paying capital gains tax if you're selling your primary residence and meet the criteria.
To get a taste of being a landlord before expanding, you could consider renting out part of your primary residence through a platform like Airbnb.
Build on Real Estate Investing For Beginners
There are many things to consider when it comes to real estate investing for beginners. For example, do you want to keep the investment property and rent it out, or make improvements and sell it in a short period?
There's also the opportunity to turn your primary residence into an investment simply by hanging on to it long-term or renting a portion of it. Following these top real estate tips can pay off in the future with plentiful property profits!
Ramp Up Your Real Estate ROI
Did you find this article on property investing for beginners to be useful? If so, be sure to come back often for more content on a variety of real estate and investment topics. Visit the Real Estate and Investing sections of the Bootstrap Business Blog to learn more about making money with properties.
