The appeal of real estate investing is simple: it offers residual income, price appreciation, and the safety of owning a hard asset. Real estate has produced many of the world’s wealthy people so there are plenty of reasons to think that property is a sound investment. If you’re young and you’re looking to purchase a new home to live in, you may be considering purchasing an investment property as a first home. While most people wait until after they’ve bought their first or second home to begin investing in real estate, you could start much sooner than you think. But like any investment, it’s better to be well-informed before diving in. Here are some things to consider when choosing an investment property.
Take the time to learn about real estate
This can be quite difficult and time consuming, but if you can’t get past it then investing may not be right for you. Talk to friends, relatives, current property managers, anyone willing to impart their knowledge onto you. Ask questions and be eager to learn. This will take some time but is crucial to the investment process.
Define your goals and strategy
Whether you want to start with a single-family house and rent it out annually or purchase an oceanfront condo for weekly vacation rentals, it’s important to know your goals and have a strategy in mind. Do your research and come up with a game plan. Don’t get in over your head. It’s not a good idea for a first time investor to attempt flipping a house or buying an apartment building.
Choosing the right property
When it comes to selecting investment real estate, you need to consider some features that will increase your return on investment. Location is the most important factor as desirable areas rent for much higher than slums. A great location makes up for shortcomings, such as small bedrooms and limited space. Keep in mind you can always renovate a property, but you can’t change the location. Make sure the property is rentable, and if possible, buy it already rented. Don’t buy a fixer-upper if this is your first property, you’ll most likely end up spending too much on renovation.
Like any investment, keep your expectations realistic. Your first property isn’t going to yield a huge revenue overnight, it is a gradual process. Real estate can be a risky business for someone who is just starting out. For first time investors, it’s best to find a good property manager and let them do their job.
