Some people claim that 90% of the world’s millionaires made their money by investing in property. It’s no surprise, then, that so many of us want to do the same thing!
With hundreds of thousands of dollars on the line, though, investing in real estate carries significant financial risk. Only with the right strategy and insight up your sleeve will you make money instead of losing it.
Looking for guidance on getting started and finding success in this business? Read on to see 4 must-know pieces of property buying advice.
1. Start Saving
First thing’s first: money.
You’re going to need a lot of it to get started in real estate. Why? Because investment properties usually demand a hefty down payment to acquire.
Expect to fork out 20% to secure the house with the mortgage provider. That, for example, would amount to a $40,000 down payment on a $200,000 house. Start saving now to ensure you have access to the kind of capital you’ll need.
2. Beware the Flip
First-time investors often try to ‘flip’ houses.
‘Flipping’ is the process of buying a cheap, rundown property that you fix up and sell on for a profit. If done right, it can be an effective way to get your foot in the real estate game.
You can, in theory, make quick money to then reinvest into a second property.
But it’s risky- especially when you’ve never done it before. All it takes is one unforeseen problem to drive up the cost of repairs. Contractors don’t come cheap and every repair eats into your profits.
Many first-time flippers are lucky to break even. The next tip offers a more reliable way to make money…
3. Look for Minor Repairs
A better approach is to buy an undervalued house that only needs minor repairs.
You know you can fix up the property with minimal hassle. From there, you can look at finding tenants or selling it on without delay. The property soon becomes a financial asset instead of a liability.
A related tip would be to focus on buying low-cost property. Now, depending on how much capital you have available that might not be a choice! Even so, cheaper houses usually involve lower expenses for upkeep and maintenance.
4. Focus on Location
The location of your property is the key ingredient to success.
It can literally make or break the potential return on your investment.
The best locations are those that people want to live in! The very best investments are those that people will want to live in the near future. You can buy them (relatively) cheap and watch their value increase as the area grows in popularity.
Look for places near transport links, good schooling opportunities, local attractions, and low rates of crime. You won’t struggle to finer buyers/renters if you buy in these kinds of locations.
Investigate local deals and heed expert buying advice for different areas, such as these steps from ABIS.
Follow This Property Buying Advice
Investing in real estate could be your ticket to making millions. But only if you do it right! Rushing into the process without the necessary insight is a recipe for taking risks and losing money.
Hopefully, the property buying advice in this post will help you avoid that fate.
Feel free to share this so others can get our great advice! If you’d like to learn more about real estate and other similar topics, check out our blog!