Investing in real estate most likely will not produce the get-rich-quick results promised by many programs. But for investors willing to work with YHP Realty, make a good purchase, and properly manage a piece of property, the rewards can substantial. Various strategies can be used on the road to real estate wealth, including "flipping" properties by renovating a house and selling it for a profit, or buying a property with the intent to hold it for many years. Typically when an investor holds a property for many years, they take advantage of residual income by leasing the property and also enjoy many other great benefits like depreciation. Here are a few things for you to think about when investing in real estate...
Investing in real estate is not for everyone. It's importnant that you have a firm grip on your personal finances before you get started. Take time to get educated by reading real estate books, blogs, websites, and any other form of media you can find. One good strategy is to follow what other successful investors have done to build wealth.
Perhaps the biggest reason investors lose money in real estate investing, like other investments, is due to lack of planning. A plan will help you get from where you are today to the place you want to someday be.
Real estate investing is an exciting field becuase of many different niches and strategies you can use to fit your personality and position in life. Perhaps you enjoy the risk of "flipping" real estate, or maybe you would like more of a long term position and choose to buy single family rentals. There is no correct answer to which property you should buy first, it comes down to your interests and what you feel comfortable with.
Buying real estate is all about choosing the right location. You don't need to buy a house in the most expensive area of town, but it's important that you pick a location that works well for your plan.
One of the most costly expenses you will face as a real estate investor is vacancy. However, vacancy is a normal part of an investor's life and should be fully expected and planned for. Check with local property management companies to determine average vacancy rate, and also set aside money each month to cover when the unit is vacant.
A common mistake by many first-time real estate investors is underestimating their expenses. Most investors will plan for small repairs from time to time, but there are many other expenses including water, garbage, utilities, legal fees, accounting, evictions, vacancies, office supplies, fuel, scheduled maintenance, and capitol improvements. Make sure you know all of your expenses before purchasing a property.
There are many ways to finance an investment property, even though you may not have cash to pay for it in full. In fact, using a mortgage in most cases gives you even greater leverage, allowing you to buy more properties while producing more income. Remember that if you are using a loan, be aware of the loan terms and interest rate which can greatly effect you overall profit.
Whether or not you should manage your own property is a personal decision dependent upon your plan, personality, skills, and availability. An average property management fee will range from (8-12%) of monthly rent collected, but a good manager will have systems in place to decrease vacancy and repair expenses.
Of all the great benefits of real estate investing, easy paperwork is not one of them. Unless you are confident in your ability to do bookkeeping, you need to budget for a professional to keep track of all the numbers.
With the markets constantly changing, you need to always start with the end in mind. When you buy a property make sure you know exactly how you plan to make money with the investment, and have mutliple backup plans just incase your initial strategy doesn't work.
All information is deemed reliable but is not gauranteed and should be independently verified. Properties subject to prior sale or rental.
Copyright 2014. YHP Realty, LLC doing business as: Your Home Pros Realty. All rights reserved.
Broker: Kody Horn
12553 S. Harrell's Ferry Rd., Baton Rouge, La 70816
"Get Started in Real Estate the Right Way"