Everything You Need to Know About Investing in Real Estate Property
Real estate can be a very lucrative investment--- but only if you know what you’re getting yourself into. All investments come with some type of risk, and real estate is no different. So before you take out a loan or put all of your savings into a property, here’s some important things to consider before you jump into the real estate investment industry.
Decide What Type of Property You’d Like to Invest in
There are many different types of properties that you can choose to invest in. The most common type that people invest in are residential properties, which are single-family homes and vacation rentals, but also include multi-family homes that house 2-4 families.
Apartment complexes, condominiums, and other structures that house five or more families are sometimes considered to be commercial or mixed-use properties, rather than residential. Office buildings, malls, hotels, and restaurants are always referred to as commercial properties. Then you have industrial properties, such as warehouses and factories.
Consider the Location of the Property
Once you’ve determined what type of property you want to purchase, it’s time to consider the most important factor that determines whether or not your investment will be successful: the location. Location is everything in real estate, no matter what type of property you have.
The most successful residential rental properties are located in areas that have things that attract individuals and families long-term: jobs and growth opportunities, good schools nearby, access to recreation and entertainment, and even popular retirement places. Successful commercial and industrial rental properties are located in areas that attract the type of audience for that specific business. The key is to find a location that will attract as many renters as possible for as long as possible.
Understand Renovations/Remodels and Property Value
It is possible to invest in a brand new rental property, but you also have the option to invest in an older property. Older properties tend to be more affordable but keep in mind that some may require renovations (cosmetic changes), or even remodels (major reconstruction). If this is the case, don’t go overboard with improvements. They can end up costing you more than what the property’s worth, and not all improvements will increase the overall value of the property.
Are You Ready to Be a Landlord?
As the owner of a rental property, whether residential or commercial, you’re the landlord. This means that all of the responsibilities of a landlord will fall on your shoulders.
One of the most important parts of your job is to find trustworthy tenants to rent your property. You must do a thorough screening of potential renters to ensure that they will be courteous and respectful tenants who pay the rent on time, every time. The other important part of being a landlord is to keep an open line of communication between you and your tenants to ensure that a professional relationship is established and maintained.
If you feel that you can’t keep up with the responsibilities of a landlord, there are property management companies that you can hire to do this job for you. Two things to keep in mind are: (1) This will be an added expense on your part. As the owner of the property, you must pay any staff you hire to help you maintain the property, and (2): The property manager you hire is a reflection of you, so make sure they’re good at their job.
Know How to Market Your Property
You’ve chosen the type of property you want to invest in, you found one in a great location, your property is ready for rent, and you know exactly who’s going to manage your property. Now all you have to do is let people know that your property is available for rent.
There are many ways to go about this, from posting your listing on rental websites to using social media. Social media is a powerful tool when it comes to advertising, so use it to your advantage. LinkedIn is an excellent social platform that doubles as a job search site and social media, where you can post positions you’re hiring for (such as a property manager).
Not everyone sees immediate success when renting to tenants, so remember to be patient. It takes time and effort to see a return on your investment. By doing proper research and taking your time, you are likely to succeed.