If you spend any time reading the news, then you know that the market has finally recovered from the crash of 2008. Though no one wants to get their hopes up, forecasts for the rest of 2016 are positive, and investors are excited about the prospects of great returns in the housing market.
However, a great market doesn’t guarantee investment success. Those looking to make money in today’s market must use some savvy, tried and true tips for improving their returns.
Here are a few hot real estate tips for the current market:
Start with a Basic Rental Property
It’s always best to get your feet a little wet before jumping headfirst into the pond. Investing in a basic rental property gives you the opportunity to test the waters and see how you like the business before you get heavily involved.
With a basic rental, you’ll go through the process of searching for the best price, taking out a mortgage and buying the property, working with tenants, managing the land, and supervising the finances. This shows you every aspect of real estate and allows you to determine which aspect of investing you like best.
Join a Real Estate Investment Group
Those who like the financial side of investments, but don’t want to be too involved with the actual property, might try a real estate investment group. This is similar to a small mutual fund for rental properties in which a company purchases a set of apartments or condominiums and allows investors to purchase them through their organization.
The investment group handles everything from maintenance to advertising to filling vacancies. In exchange for handling all of these services for you, the group takes a percentage of your monthly rent.
The same situation happens when you hire a property management company. You purchase the property and then trust a company to handle the management aspects of the property, allowing you to enjoy your profits without hassle.
Always Study the Location
If there’s one stereotype you should heed about real estate, it’s that location matters. Before you make a down payment on a property you think will be profitable, check out the location first.
There are several important aspects to consider when looking at a potential neighborhood. If you frequently see “for sale” signs in yards and businesses closing down, that’s a sign that the economy is low in this neighborhood, and you’re not likely to make a good profit.
In addition, consider the school districts. Even if your target buyers or renters don’t have kids, the quality of the school district will determine the quality of life. A great school district with quality teachers and nice equipment will mean higher-income renters and buyers.
Capitalize on Wholesale Properties
If you have any experience investing in the stock market, this principle will make sense to you: Always look for the best deal. For example, with the stock market, you don’t buy stocks when they’re priced high. You buy them when the market is down but looking to turn around soon.
Purchasing a house is the same way. Avoid paying full price for a property whenever possible. Look for what real estate tycoons call “wholesale properties,” which are offered at a high discount. Usually, it’s because the property needs some work, but sometimes it’s because the seller is trying to move the property quickly.
In situations where you’ll have to do a little work, you’ll still be able to make a good profit after it’s been improved. Great real estate investors know how to maximize their investments in any situation.
Stick to a Nearby Neighborhood
When you’re first starting out, study the market of your own neighborhood. You’re already familiar with the economics of the area, even if you don’t realize it. You’ll have a first-hand account of the many amenities available to potential buyers or renters, and you’ll be able to market it as such.
Check out listings on sites like Zillow and Craigslist and look for good deals. Strike up conversations with your neighbors about the state of the local economy and ask if they know anyone who’s moving soon. You’ll have a much easier time predicting the future market when it’s in an area you’re familiar with.
Keep Cash on Reserve
Even the nicest of homes will require repairs at some point, particularly if you’re renting. It’s always smart to keep some money on hand for unexpected costs. If the property is being rented, this isn’t a situation where the repairs can wait. You have a legal obligation to make the repairs as quickly as possible, and if you don’t have any cash on hand, you won’t be able to keep your commitments.
Use Tax Benefits to Your Advantage
The government has set up the economy so that it’s enticing for private investors to take care of housing opportunities. That way, the government can concentrate on other things. As a result, there are a variety of handsome tax benefits for real estate investors, depending on your location and your preference of investments.
One of the best tax benefits that comes with purchasing a property is the depreciation write-off. This happens when you buy a property that’s not brand new. You can write-off its age as a tax deduction. These kinds of write-offs are extremely useful in reducing the amount of tax owed with your investments.
Real estate investments take time, money, knowledge, and a certain amount of skill. It’s no picnic, but the rewards are well worth it. When you’re ready to start making your investments, Green Residential can help. Whether you’re looking for aid in buying or selling a home, or you need great property managers to handle the management side of things, our years of experience make us more than qualified.
For more information about how we can help with your real estate investments, contact us today!
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