Real estate investors have a lot on their plates, especially today. The world of real estate investing has shifted in today’s economy, but good real estate investors can still make tons of money. Before you dive in to real estate investing, make sure you’re ready by asking yourself these five questions:
1. How much money am I willing to pay out of pocket? All real estate investors should know how much capital they have before they start investing. Of course, just because you have a certain amount of money doesn’t mean you should spend it all on one property. Remember, taxes and closing costs can eat up a significant chunk of your profits if you aren’t careful with your capital.
2. Why do I want to get involved with real estate investing? Are you looking to build up cash for retirement? Do you want a quick capital gain? Know why you want to get involved in real estate, and plan your investments accordingly. You can make a quick buck flipping real estate, or get involved with commercial real estate for a long-term investment.
3. What type of real estate investing am I most interested in? There are essentially two types of real estate investments: those that produce income, and those that grow in value. Ideally, you would find an investment that does both, but those properties are few and far between. If you want a property to produce income, consider commercial real estate (apartment complexes, shopping centers, etc.). Properties that grow in value are usually residential, but can also be commercial.
4. How much involvement do I want to have in my property? If you’re planning on being fairly hands-off with your property, you might need to hire people, particularly if you’re entering the world of commercial real estate investing. Make sure you know how much time you’re willing to put into your investments before you start.
5. Do I want to involve a partner? Getting a partner to join you in your investments has tons of benefits (including increased capital), but can cause you to give up some of your autonomy. Considering the positive and negative sides of having a partner before you make a decision either way.
Make sure you’re successful in the real estate world by doing some thinking before making a purchase. Deciding on a few things in advance can help you stay focused and make your real estate investments a big success.
