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5 TIPS FOR FIRST-TIME INVESTORS


As the economy recovers, many people are looking to real estate to diversify their investment portfolio - and for good reason. Investing in real estate offers long-term financial security in ways that other investment strategies may not. The right plan, ample capital, and an eye for a diamond in the rough is sage advice if you’re a first-timer. Here are five more tips to help you find, buy, and rent houses for wealth. 

1. Nail Down Your Numbers. Investing in real estate is all about the return. To understand it you’ll want to know what you can buy the home for, what it will cost to rehab it, and what you will sell or rent it for. Once you’ve bought the property, it’s important to have enough reserves to pay the mortgage whenever there’s a vacancy. Many seasoned investors recommend saving six-months worth of rent. 

2. Determine Your Strategy. In addition to capital, you’ll need to determine how much time  you’re willing to invest. Do you want to become a landlord, or would you rather restore and resell properties? Are you interested in apartment buildings and other commercial real estate, or in buying land that can be developed? Knowing your strategy in addition to your numbers will narrow down your choices to the ones that fit your unique investment strategy. 

3. Select with Care. If you don’t plan on spending the initial capital to update the home, you’ll want to choose one that is low maintenance, performs well on the inspection, and appeals to a wide range of buyers. It’s important to remember that not everyone is as invested in the upkeep of a home and yet, they still want to rent in a great location! 

4. Rethink Location. If you’re buying an investment property with the hopes of renting it, you’ll want to think carefully about the location - and not just what neighborhoods are hot right now. Which areas will be popular in five, 10 or 15 years from now? Where will new developments start popping up? Where there’s commercial activity, residential will most certainly follow. A great deal in a great neighborhood, however, will always be a smart investment; especially if it’s a good school district that families will gravitate toward. 

5. Hire a Team. Like any property, investment homes will require a certain level of upkeep. As the owner you can choose to handle it yourself, or (and it’s recommended) you can hire a team to call when issues arise. Line up maintenance individuals who can take care of popular external and internal issues. You might also acquire an attorney to consult with on tenant issues, a property management firm to handle the day-to-day rental affairs, and an accountant to help you understand the tax ramifications of investing.

Bonus! The most important thing to remember if you’re considering real estate as an investment strategy is to align yourself with an experienced professional who can quickly find properties that match your wealth-building goals.

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