Top 5 Tips that A First Time Real Estate Investor Needs To Know
Why do people invest their money? People think that their finances automatically grow whenever they invest in real estate. However, that’s not always the case.
What does a first-time real estate investor need to know?
Most people say that investing in properties equates to taking good care of resources and allocating enough for the future. Young adults nowadays spend their money on travel, skin care products, makeup, and other material objects. At some point, this hinders their ability to prepare for emergencies like medical expenses.
Follow these tips in order to save on future property investments.
#1 Set achievable financial goals
When planning for investments, always know what the end goals are. Setting achievable financial goals helps real estate investors be more realistic. If they set their goals too high, it becomes very hard to achieve anything. Some think of it as a choice between money vs. time.
Most remember this idea:
The more that one person possesses of one element, the more it takes away from reaching your financial goals.
It means that first time investors need to completely understand their goals and ensure that every move they make brings them closer to their goals. However, some investments turn out bad which necessitates consulting a financial consultant.
#2 Refrain from spending money on seminars, books, and other workshops
In starting a new journey, people wonder where they will start, how to start, and what to do in order to succeed. The same goes for investing, as first timers wonder where to get reading manuals or lectures to teach them the basics. Of course, it begins with listening to what the experts say: “Start buying and collecting.”
This happens right after setting goals. Every investor directs their energies into mastering the right time to start investing. Now, take a piece of paper and start jotting down the questions you have for a financial consultant. This way, you save money and time instead of searching at bookstores.
#3 Try looking at properties to invest in
First timers usually grab the first property they see available. However, that leads to either a good return or no return at all. In looking for a property to invest in, investors include their personal preferences in picking properties. Most new investors remember the properties by their appearance or first impression.
In choosing the right investment, remember to do a thorough check for every property that interests you. Create a list that includes the top five (5) and narrow them according to the goals.
#4 Create a well-researched and detailed financial analysis
Setting goals comes with thorough research and detailed financial analysis. Make sure to include different options according to your goals. Remember to refrain from buying property at a higher cost, lesser visual appeal, or investing in overestimated property values.
As a first time investor, make sure to check these before making a first investment:
- Cash flow
- Net income
- Return of investment
- Cash-on-cash return
- Cap rate
- Total return of investment
Some investments need loans or bank financing in order to fully acquire the property. Property consultants and bankers educate first time investors in choosing the best options.
#5 Find a great realtor to help with picking the best options
For every first timer, people around them strive to help them make the right choice, however, some realtors are inexperienced and do not give the best advice. Nowadays, realtors take courses to improve their skills when it comes to foreclosed properties. Other investors say that in order to find the best realtor, it’s best to check their performance through:
- Observing how many properties they sold
- Checking their understanding of return of investment, net operating income, and debt service work.
Finding the right property for a first time real estate investor takes goal setting, choosing a bank, and picking the right property. It takes time but investing really does result in bigger and more fruitful outcomes.