Getting Started in Real Estate Investing

Get Started in Real Estate InvestingDeciding to Invest in Real Estate.

Most people would like to make more money.  How would you like to do this dynamically while concurrently enjoying what you are doing? Think about real estate investing.  It may not be as risky as you think. And, the positive outcomes can outweigh the risks. The look and feel of this type of investing is much different from bank investing. You have a tangible product, which could, in turn, earn you many long-term benefits, but there is more effort and thought needed to have this type of investment be successful.

Searching for Your Property.

When searching for your first investment property, set clear expectations with your realtor. Do you plan to rent it for several years, or sell at a profit in a couple of years? Either way, consider short sale and foreclosure properties. These properties can be purchased below market value, minimizing your initial down payment. Select a good location that will, in turn, attract good tenants. Choose a property that does not require too much work before a tenant can occupy it.

Required Expenses.

Selecting a property that is in good condition, and not requiring too much work, will allow you to put more money down, or place money in a reserve account for possible unforeseen future repairs. Determine how much rent is needed to cover your expenses, such as mortgage, taxes, insurance, HOA fees, etc. Can this house in its location achieve that figure or greater? To find out comparable rent figures in the community with similar type houses, you can visit such websites as Zillow and Trulia, which provide estimated rents. Lastly, know the market. Current market trends can be found at the National Association of Realtors. Buying when the market is down is the best option so you do not lose money in your investment and are able to sell it and earn a profit if you so decide in a couple of years.

Choosing How to Manage Your Property.

Your realtor can be your property manager for your property. He/she can find a tenant, prepare the lease agreement and be responsible for arranging any maintenance or repairs – which are, in turn, paid by you. You could also self-prepare the required legal documents for your lease agreement. Websites such as ezLandlordForms.com can provide both free and fee-based documents needed. The property manager could also prepare these documents, as well arrange repairs and maintenance for a fee, which is often a percentage of the monthly rent. This percentage can be as high as ten percent. To earn more revenue, you can manage the property yourself. You can be the landlord and be your own boss! This is easier if you are in the area where the investment property is located and if the property is a long-term rental. Your realtor can still find your tenant (with your selection approval) and prepare the lease agreement. Then you take over.

Establishing a Relationship with Your Tenant.

Establish a positive relationship with your tenant and be responsive. It is a two-way relationship. Just as a landlord may have hesitations with new tenants, tenants may possess these same sentiments with a new landlord. Managing the property yourself does not necessarily mean performing the work or maintenance on the property yourself, but rather organizing and making the arrangements for such actions to take place. Remember that these expenses can be claimed for tax purposes.

There are many factors to consider when deciding if you would like to get started in real estate investing. It can be a long-term investment and continued source of revenue, which increases in value over time. More income can be earned in investment properties than traditional savings accounts. You are an active participant and decision maker. There are many options to consider, and if this is something new for you, do your research. Remember there will be new experiences you encounter, but with careful and calculated considerations, it can be a long-term source of income and, of course, enjoyment.

The content herein is that of the author and does not reflect the position or opinion of Western International University (West). Lisa M. Buccigrosse, M.S.Ed., NBCT has been an educator since 2001. She has served in a variety of capacities including ESL/bilingual/Spanish teacher, instructional coach, mentor, administrator, and university professor. She has been a faculty member at Western International University since 2010. In addition to her educational roles, since 2010 she has owned a small business in real estate investing and landlord of rental properties.

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