Buying real estate doesn’t have to end at finding your perfect home—many people turn to real estate investing as a way to make some extra money, save up for retirement, or even as their main source of income. While real estate investing is not for those who want to get rich overnight, with the right knowledge and partners you can make smart choices that will help you maximize profits and minimize risk. Here are some things to consider before you get started:
1| No mortgage insurance means a big down payment
In most cases, mortgage insurance is not an option for investment properties and most lenders will ask for at least 20% down. This means that you’ll need to have access to a significant amount of cash from the get-go.
2| Consider starting small
As with many things in life, when it comes to your first investment property venture, it might be best to start with something small to get your feet wet. Starting with a single apartment, duplex, or condo will give you the chance to get acquainted with the process and evaluate whether this is something you want to do long term, and at a larger scale.
3| Evaluate fixer-upper opportunities carefully
While buying a house at a low price with the intent to flip it may seem simple enough, you have to take into account the slew of factors that will affect your earning potential. These factors include the amount and type of repairs needed, the value of similar properties in the neighborhood, and the costs of owning the property until it’s ready to sell or rent. Before purchasing an investment property that will need lots of TLC, take a step back and decide whether you have the finances and time to put into the project.
4| You’ll want to step up your DIY game
Whether you’re renovating a house or becoming a landlord, you’ll want to consider doing the smaller projects yourself. In many cases, you’ll find that hiring contractors for the little fixes and restorations can really add up and consume a significant chunk of what would have been profits. Of course, it’s important to know your limits and hire help for advanced repairs, such as electric or plumbing work.
5| Build a network of trusted professionals
Another great thing to have when starting out with real estate investment is a network of professionals in the area that you can trust. Make sure they’re all properly licensed and insured, and that they’ll be able to help you in a timely manner with more complicated or specialized projects.
Whether you’re starting to think about investing in real estate or are ready to take the plunge, our realtors at Cheng Real Estate Group are here to help. We work with many clients that purchase investment properties, giving us the experience, knowledge, and contacts to guide you through the process and set you up for success. If you’re ready to get started or simply want to chat, give us a call at 608.957.2683.