The very idea of investing money in real estate can be scary – especially if you are a beginner. Blogs, television pandits and books that share their views on the subject can not only get intimidating but also confusing. To cut to the chase, here are a few tips on how to gain financial freedom by investing in the real estate market. If you are lucky enough, you may even buy a home without paying a real estate agent’s commission.
Do your homework first
There are many young investors who rush into real estate when they hear it is a great investment. If you are lucky, there are chances that you will succeed and become an advisor yourself. However, most of the people who jump in without thinking end up getting more than their fingers burnt. So it’s best to do your homework thoroughly before you take a plunge.
Test the waters before jumping in
If you are in your twenties, the idea of investing money can be an exciting game, be it securities or property that promises high rewards. When you think about dabbling in real estate, keep long term goals in mind. Handled well, real estate investments are not only a safety net, but act as a security blanket when you retire.
The matter of a nest egg
Chad Carson, who has been in the real estate business for the past 13 years feels that you should make sure you have a nest egg ready before you think of buying rental properties.
‘Rental properties are wonderful for building wealth…[but] they’re not going to produce a lot of income on the front-end at least not consistently because you might make $200 a month on a rental property, but then what happens if a year and a half from now, the heating and the air system goes out on that rental property?’ At the end of the day, Chad feels, you need to generate large sums of money to pay your bills.
Long-term investment planning
Your returns will be greater, the longer you own a property. It is not a good idea to jump in and out of ownership of property. To increase your returns, a lot of patience is required.
Quitting your job immediately is a bad idea
There are many real estate investors who land in trouble where finances are concerned as they depend very heavily on the money coming in from their rentals. But when the market takes a plunge, there is not enough money to take care of their day to day financial needs. So it is a good idea to hold on to your day job.
One bedroom apartments are a good investment
Buying a one bedroom apartment makes sense as there is always someone or the other looking for a small place. This includes widows, single working people and college students. Since the size makes it affordable, it will always remain in demand.
Investing in real estate is the way to go for young investors. But it is essential not to jump in at the deep end and think carefully before you act.