Category: Investing

Getting Started in Real Estate Investment

  • By Householders Guide
  • 28th May, 2011
Real Estate Investment

Real estate investment is a fairly broad idea that involves many different factors.

If you are going into real estate on your own as a form of creating extra income or saving for the future, you would be well advised to decide which direction you are going to take from the beginning, as chopping and changing throughout your plan could end up costing you the very money you are trying to make. Your two basic routes are buying property to develop and then sell for a profit or buy property that you will manage and lease out to tenants.

Both of these forms of real estate investment have their benefits and pitfalls which we will cover shortly. This should help you decide which direction you are going to take. The easiest way to look at the entire situation is to understand what your limits are, and what you can comfortably achieve with your spare time and money. Unless you see this as a new career choice, there is going to be limited time for you to maintain your real estate portfolio. Keeping this in mind when investing will help you make much better decisions for the long run.

The first thing to remember is that there is not often a short term strategy attached to property investment; most plans should cover years rather than months. Imagine it as an investment for the future rather than trying to build something short term.

When looking at real estate investment for development, you will want to research the average prices of properties in the area of your potential buy, as the last thing you want is to buy a house at bargain prices and then realize it is simply the local market that is failing. Take time to assess how you could improve the property to increase its price; this may be renovations or a complete overhaul. It really depends on the property and the amount of gain you are trying to make on the sale of the property. The disadvantage to this is that you could end up spending an awful lot of money and not being able to make it back again on the sale of the property, though this is always a risk with any property.

On the other end of the spectrum, you have investment for leasing. This kind of property could be anything from factory buildings to small houses and everything in between. Your investment is more long term when it comes to leasing; you will slowly make money during the lifespan that you own the property, and if set up properly, you could use the rentals to maintain your mortgage payments. Keep in mind that you will have to constantly maintain these properties, so costs could be ongoing. Therefore, always be prepared to pay a little more to make things right again for tenants.

As you can see, there are several roads to take with real estate investment, but by planning properly and seeking professional advice, you can stand to make huge gains. Plan first, act second, and you should be onto a winner in no time at all.

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