What does it mean invest in real estate? Rather than just buying a home to live in, investing is buying real estate that will generate income. This could mean that you are buying a home that you intend to remodel (renovate and quickly sell for more than you bought it) or rent it out. Or maybe it’s something more: an apartment or commercial building that has tenants who will pay you enough rent to cover the cost of owning the building, and then some more.
Obviously, these purchases are expensive, but on the other hand, interest rates are low! if you are are able to buy investment property but haven’t done so before, read tips from Realty ONEGeneral Director Kuba Evgeniev will spend the money wisely. Remember, the goal is to accumulate wealth, and that takes time. Take your time without planning!
1. Find a mentor.
As with any initial investment, it is always helpful to get help from someone who has done it successfully (or at least learned from their mistakes). “If you want to get into real estate investment in today’s market, I encourage you to join a mentor,” says Dzhudzhenev. “Get your feet wet and get some experience so you don’t get burned.”
2. Pay attention to where people are going.
The pandemic is having a huge impact on where people live. “As fewer people return to the office and more people rethink their life choices, we are seeing a resurgence in cities like Phoenix, Arizona, at our headquarters in Las Vegas, Nevada, and even in once-less popular markets. such as Boise, Idaho, says Jujenive. “As more people move to these metros, but also to the suburbs to get more space for less money, we will see even these areas become more popular, leading to higher house prices.”
Evgeniev explains that an area with a higher property value could potentially bring a more profitable real estate investment. Therefore, pay attention to “hot spots” – it can be a specific city or even a specific area – when deciding where to invest.
3. Think about how the area will change.
Evgeniev is hedging his bets on apartment buildings and boutique hotels for sale near malls that may soon cease to exist due to the rise of e-commerce. “I expect retailers like Amazon to buy up these malls and turn them into distribution centers, creating jobs next to the former shopping malls,” explains Evgeniyev. “I believe that many of these apartments near shopping centers will be converted into condominiums to accommodate the workforce.”
Let’s say you are not ready to invest in a building opposite an empty shopping center, we understand that. But the key is to think critically about the area – and even the particular intersection – that you are looking at. What might it look like in ten years? What will commercial tenants look for at the local building stock? It is impossible to predict the future, but to be successful in real estate, you need to try and be willing to take some risks.
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4. Make a business plan before investing.
Before placing a bet, make a thorough financial forecast to find out how much you can afford to spend on a given property in order to get an actual purchase profit. “If you want to start investing in real estate, I would, number one, advise you to count and see when the cash flow will be,” says Dzhudzhenev. It’s not just how much money you have and how much income the building brings; you will also need to consider external factors such as interest rates, vacancy rates and occupancy rates.
If finance isn’t your area of expertise, Jewgieniew suggests using online resources to help you make financial predictions. You can even find great resources on your network – be it a friend, family member, colleague, or even a real estate professional you’ve worked with before. “One of the best ways to invest for the first time is to find a partner who has experience,” says Dzhudzhenev. “You can learn a lot in the process!”
5. Take your time to turn the house over
“A year ago, I would have said something different, but don’t try to get in and out quickly,” advises Jujenive. “Buy, hold in the long run, and focus on cash flow.” Why wait? The competition for this property is fierce right now, so you may have to pay a little more than you need to buy it, and since building materials are also too expensive, it will be more difficult to make a profit.
It all comes down to the fact that it takes time to figure out the numbers before rushing into the case. “If you have a business plan and resource network like an experienced real estate professional,” says Jujenive, “now could a good time to invest in loose-leaf properties. “
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