With real estate investing, you can either be incredibly successful, or you can lose it all. Yes, location, location, location is hugely important, but so who you are dealing with is even more important. However, the world of real estate is filled with shady characters. Consider those late night advertisements on television, where realtors promise to make you a millionaire, for instance.
The first thing is to find something with a good return on investment. Real estate is an illiquid asset that require you to take money out of your liquid assets. You need to strive to get a return rate that is the same as what it was on your liquid assets. Basically, you must find good cash flow properties, not money pits.
Also, make sure that your investment isn’t too risky. Real estate is always risky, but some more so than others. If at all possible, avoid tenant-in-common options, fixer uppers, real estate development and private real estate funds. Invest in these options and it is unlikely that you will ever see a return. Instead, choose to have titles that are totally yours, on properties that are interesting. These decisions should be made based on research and analysis, as well as due diligence. Stay away from properties that have to managed intensively or are otherwise time-consuming. Stay away from student rentals, vacation properties and bad neighborhood homes, for instance. A better option is a property that someone with a good credit profile is likely to rent for a long period of time. You will only be able to achieve this, however, if you also commit to being a really good and respectful landlord. It is impossible to never have any problems with a property, but if you can resolve those issues quickly, this shouldn’t be too much of a problem.
For those who don’t have a lot of money to put down on a property, it will generally be a lot easier to still get started in it if they are younger. This is due to the fact that banks will generally want you to put at least 20% down on a rental property mortgage. Unfortunately, 20% can be much too high, particularly if the property needs repairs as well. However, those who are younger can often get better deals on mortgages, as they have longer to pay them back. Real estate investing does involve a lot of other things as well. Naturally, one of the most important things you need to do is find a property that suits your needs. However, even this requires a whole lot of research and analyzing. You also need to spend some time looking for a realtor that can represent your interest. Their goal is to make sure that you find good properties and make solid investments. You will then also need to learn about and research what it means to be a good landlord, which takes a significant amount of time as well. However, do always remember that it is absolutely worth spending this time.