To an entrepreneur, investing is essential. Making the right investments ensures a good income, separate from your work or your business. It lays the foundation for an early retirement, or can provide capital for a new venture. But before you dive right in, here are the things you need to know about real estate investment in 2016.
You need financial goals
Don’t just make an investment because it looks like a good bet – you need to know what you are looking to get out of it. How much of a profit would you like to make? When would you like to make that profit? There is a difference between buying an old property and improving it for a quick turnaround, and buying a good property to rent out for continual income. Do you want to rent for a while and then sell in a couple of years when the market improves? Think carefully about your expectations, particularly with the UK’s Brexit and lingering effects from the recession hitting the market.
You must know the market
You can always benefit from extra data, no matter how self-sufficient you might be in your own business. Simply put, keeping an eye on the stock market with tools like MarketMatters gives you the edge on your competition. You need to know when to invest and when not to, and it would be almost foolish to ignore that kind of information. Without it, you could waste a lot of time and money on the wrong investments. With it, you could hit on the next big market shift before it happens.
You should shop around
Don’t expect to go see one property and make a purchase. You should be looking at a lot of different options and then weighing them up against one another. Which one has the most potential for profit? Narrow down your selection based on your financial goals and market knowledge, not on which house you think is the best looking. You don’t have to live there, so think more in terms of analytics and less in terms of taste.
You have to use analysis
Before you commit to buying a property, make a proper financial analysis. Look at the history of the property – tax bills, rental rates, and so on – and use this to work out what the best price would be in order to make a profit. Use this to work out what your maximum price can be, then compare. Is the house priced higher? You can make a lower offer, but never buy if the price is too high. Use common sense and move on if the price isn’t right.
You shouldn’t go full-time
Remember that investing in real estate is a means to get more capital, not a new full-time business venture. If looking around properties starts to interfere with your real business, you need to scale it back a bit. It’s possible that you could do with hiring a manager to look after your portfolio for you, taking most of the work off your back. Otherwise, perhaps it’s better to consider a different form of investing, or to try to limit the time you are spending on this project. Don’t let it harm your main passion and business.
It may seem like a lot to take in, but there is always expert help available if you need it. Otherwise, remember, it’s only money – and you shouldn’t stress out too much if the profit is not as high as you expected, or if you find that you don’t enjoy making these investments.