When it comes to investing your money, real estate is a great place to do it. If you do it properly, investing in real estate can net you a tidy little profit over the long-term. You can even make good money over the short term if you focus on flipping fixer-uppers. However, before you make the decision to invest in real estate, make sure you know the following five things:
- Consider all of the costs – One of the common misconceptions people have about buying real estate, in general, is that the price of the property is the amount that they are investing. However, there are usually many other costs to consider. If you’re flipping a house, you’ll have to know what needs to be renovated and replaced and how much that will cost before you can determine if the initial price is a good investment. If you’re making a long-term investment, consider costs such as homeowner’s insurance, property taxes, maintenance and more.
- Pay attention to the location – Just because the house you’ve found is available for below market value and it’s in excellent condition doesn’t automatically make it a good investment. The location of the property has a big impact on its value as well. Look into things like how accessible the property is, how far away certain conveniences are (such as grocery stores, gas stations and the like) and what the neighbourhood is like. Additionally, you should do some research into what the future holds for the area around the property. While some plans could diminish the value of the property, others such as a public park nearby, could actually improve the value, making it an even better investment.
- Understand that you can negotiate – Prices are not set in stone. You should be able to negotiate with sellers over the cost of the house. The price isn’t the only thing you can negotiate either, you may be able to negotiate some of its terms as well, such as the addition of a home warranty, the replacement costs of old appliances and more.
- Don’t waste time with unmotivated sellers – Make sure that the seller is motivated to sell by asking why they are selling. Sellers who aren’t motivated are less likely to budge from the listed price, even if that price is above market value. Don’t waste your time on unmotivated sellers, odds are you won’t get anywhere with them.
- A real estate agent can be extremely beneficial – A professional real estate agent can help you find the types of properties you’re looking for, determine if the pricing is fair and give you valuable information about the neighbourhoods and so much more.
Investing in real estate can be a rewarding endeavor as long as you know what you’re doing. These are five things that you will want to know before you make the decision to invest your money in real estate.