6 Smart Tips For First Time Real Estate Investors
Real estate investment is a great way to multiply your money as it gives you a platform to diversify your income, and create wealth for yourself as you continue to enjoy the rewards of passive income for years.
As promising as real estate investment might be, it is not for the faint-hearted individuals as there are huge risks to face. So, real estate investment is not one to rush venturing.
….You have to do your due diligence before investing in it.
Carry out adequate research about properties you intend to buy before committing your money to them.
Nothing should take the place of thorough education…..
Get sufficient knowledge and understanding about the area of real estate you want to get into to minimize the effects of risks.
A common strategy that individuals apply to avoid falling into pitfalls in business is to tap from the experience of individuals who have succeeded in such businesses.
The same thing applies to investing in real estate…..
To reduce the chances of failing in it as the first time real estate investors, it is wise you tap from the experience of other seasoned, successful real estate investors. As a first-time real estate investor, it is advisable you get a successful mentor who is ready to put you through the ropes of real estate investors, thereby reducing your chances of failing in it. Having the right mentor is a smart way to go for newcomer real estate investors.
But there are other strategies you can apply.…..
Here are other smart tips you can apply in your real estate business as a first time real estate investors so that you will not make blunders in your venture.
Look for property managers in your locality
Real estate investment involves spending most of your active time on properties…..
If you are a busy type and you won’t like to spend much of your time inspecting properties or even making repairs on damaged properties, it is best you go for the services of property managers in your area. Search for a reliable property manager or a property management organization that will be responsible for taking care of your properties.
They will carry out all necessary tasks such as repairs, maintenance, a collection of rental fees, managing tenants and giving you useful property investment information. In return for the services they offer to you, you will pay them certain agreed percentages of the rental rate.
……It is a smart tip to practice as a newcomer real estate investor.
In engaging the services of property managers in your area, it is very important you go with trustworthy ones as some properties managers might not have the needed experience and responsiveness in carrying out essential tasks on your behalf.
Though getting a good property manager is not easy, it is recommended you take your time to get the best in your area based on experience, track records and referral as it is a basic factor to create wealth in the real estate industry as the first time real estate investor.
Keep to your work
It is good you collaborate with real estate agents…
There is no harm in it especially when it becomes necessary. But before collaborating with a real estate agent, it is very important you do your work very well.
Keep to your work.
Doing this can save you from some negative consequences later in the future.
The importance of the role of a real estate agent cannot be underemphasized.
But as a first-time real estate investor, it is best you do some legwork first. There should be no substitute for carrying out your work in thorough research.
Swipe to other options
There are several ways you can invest in real estate…..
It is not a must you buy properties. An interest in real estate investment does not give you the only option of buying a property. If you don’t have enough money to buy properties or lease buildings for rent, you can still invest in real estate business as there are other alternatives for you.
One of such is the Real Estate Investment Trust (REIT).
…..With the real estate investment trust, you can still partake in real estate investment even if you don’t have many funds. It gives you the privilege of pooling your money with other investors.
The combined funds are then used to buy residential or commercial properties. When the properties are leased out for rent, the investors share the income among themselves in appropriate percentages depending on the amount of money invested. The investors can also decide to use the proceeds of the rental to reinvest into other properties.
When choosing a real estate investment trust, ensure you go with the right one to reduce risks.
Go with the ones that have records of trading in the open markets. Also, ensure you go with the one that has a reasonably low cost and management fee. Opting for publicly traded Real Estate Investment Trust will be beneficial to you as a first-time real estate investor because non-traded investment trusts are risky.
They are hard to liquidate and value. Hence, don’t go for them…
To take part in the maximum benefits real estate investment gives demands that you have proper knowledge and understanding of the best and most suitable way to invest. Investment in real estate is a sure way to build lasting wealth, but there is no streamlining to owning properties only as there are other options you can consider.
It is not a must you become a landlord. You can consider other alternatives to the idea of directly owning properties.
Protect yourself through the right business structure
A smart tip you should adopt as the first time real estate investor is to get the needed protection for yourself by making use of the right business structure.
Some real estate investors have done themselves harm by holding rentals in their names.
Doing this is detrimental as you will face the consequences of increased tax payment and liability.
It is advisable you create a different legal account for holding rental payments. It is the right structure to implement as a real estate investor. Doing this will give you the advantages of minimizing your taxes, reducing your liabilities and also maximizing the returns on your investment.
As a first-time real estate investor, it is very important you set things in order structurally. It is a smart thing to engage the services of a seasoned tax accountant and a professional real estate attorney when launching your new real estate business.
With their services, you will have a good business structure and a thorough understanding of your responsibility in remitting taxes. They will also advise you on the best way in structuring your rental incomes.
It is very important, and as such, you should not underlook it.
5. Learn from successful individuals
As a first-time real estate investor, a common way to avoid the common pitfalls associated with real estate investments is to learn from others who have made a similar real estate investment in the past.
Get the help of a seasoned investor as your mentor who is trustworthy and has proven results of success in real estate business.
Team up with him, pick his brain, learn from his experience of success and little failures, if there be and apply to your case. It is a simple and easy way to go with achieving success in same real estate investment with him.
Joining a group of veteran real estate investors in your neighborhood or online community is also another way you can adopt in learning from the experiences of others. When you join such mastermind groups, you learn from others and the ropes of real estate investment.
With this, your chances of having success as the first time real estate investor will increase as you get to know the common mistakes to avoid in real estate.
To meet such individuals or groups, you will have to do a simple Google search……
A search term like “real estate hangouts in my city” will do you good.
It is advisable you join a minimum of 10 mastermind groups that have a minimum of 120 active members. Also, ensure that they hold meetings and discussions regularly as this will help you to broaden your knowledge about real estate investment.
Attend as many meetings as you like.
6. Work with a good real estate agent
We just mentioned earlier that getting a good mentor is a great way to accelerate your success in the real estate business. It is also a smart tip to familiarize yourself with the local real estate market.
To this end, you will need the services of a real estate agent who knows the length and breadth of your local area very well.
For larger cities with different demographics, you will need the services of different real agents that will cover different areas of the cities.
Though real estate agents will give you good pieces of advice, they will likely want to sell properties to you.
So, be careful not to be distracted from your goals. You also must understand that there is no alternative to your work. You have to carry out your assignments squarely as the first time real estate investor.