Investing in real estate is commonly regarded as one of the wisest types of investments that a person can make. With real estate, there are various possibilities and a lot of potential. Some will renovate and sell, others renovate and rent, and there are even people who don’t renovate at all. Vacation properties, commercial properties, and residential properties all bring their own pros and cons. It is true that real estate is a risk, but it is a more calculate risk than many others, and one in which you, as the investor, are given a lot of control.
What Do I Need To Know To Make The Best Real Estate Investment?
1. Be Patient
Whether you’re planning on flipping, renting, or owning for a while, patience is one of the key values that you should be abiding by. Of course, in situations filled with risk, impatience is often the impulse, but 99% of the time it will pay off to be patient with your real estate investment strategies.
Take a look at this graph presented by Vancouver realtor, Dave Jenkins, taken from Vancouver MLS, which shows the fluctuation of the real estate market from the perspective of those engaging with Vancouver real estate:
With this in mind, think about how you can realistically choose to buy or sell order to achieve the best investment experience possible. Obviously it is impossible to tell the future, but many professionals have fairly accurate means of prediction. Basically, in an ideal world you’ll buy in a market-bust and sell in a boom. This may mean playing the waiting game through the boom and bust cycle, depending on whether you are a buyer or a seller. Just like it’s not wise to buy a property when it is peaking in cost and tanking in value, it is likely a worse idea to panic when values plummet and sell immediately before the property value has the opportunity to rise to the mean again.
2. Be Selective
If you want to invest, no matter the market, there are a select few elements of the process in which you will have full freedom to choose. The agent you work with is one of these, and that is an important choice because, not only will you need to trust this person, but you’ll be spending enough time with them that you will need to enjoy being in their presence, too.
The other element to be selective about, of course, is the property you choose to buy, and when you buy it. There will always be properties available, but with an investment of this proportion, it is suggested that you wait until there is one that truly grabs your attention. There is no use buying something you have major doubts about, even if the argument to do so seems convincing in the moment. To avoid being someone who regrets their real estate purchase, you can prepare yourself by having specific parameters in which you agree with yourself to abide by, and, maybe most importantly: trust your gut.
Basically, if you browse the market and look at an abundance of properties. If nothing suits your fancy, do not feel pressured to select a property to move forward with. Use your patience, and begin your investment procedure by keeping an eagle eye on new listings.
3. Be Strategic
Follow through with your strategy and be consistent. If you are looking to buy low on a rough property with the hope of flipping the property through thorough renovations, don’t let naysayers tell you to do otherwise. Flipping is, generally, a higher risk investment than becoming a landlord. But, if you’re prepared for the specific procedure of flipping, you are likely not as well suited for the longer-term commitment of becoming a landlord and managing a property.
Make an actionable strategy and start moving forward.
The element of risk will never be eliminated from real estate, but that doesn’t mean that you shouldn’t formalize your ideal method of investing and stay true to it. Don’t buy a property if you don’t believe strongly in it; no matter how convincing your real estate agent is being… On that note...
4. Use The Help of the Right Professional
Just like any group of people, there is a wide variance of professionals in the real estate agents who accel at different aspects of the job. You will want to find a professional to help with your process, but not just any professional. Your ideal real estate agent will likely be someone with experience in the type of endeavor that you are proposing to move forward with.
There are important reasons to use an agent rather than do it on your own.
The instinct of many driven people is to remove the “middle man” and go at it alone, but this is one way to make an already risky investment even less stable. Real estate agents have a real purpose, and their familiarity with the ins and outs of buying and selling property will allow you to sleep soundly knowing that you are following the proper procedures and not being taken advantage of at any step of the process. Although they certainly aren’t free, the value that they can add to your real estate experience is often completely covered.
In all of this, don’t forget that the foundation of your forward movement should be based on a firm idea of your ideal budget, as well as your absolute maximum. Do not spend more than you can afford on a real estate investment, especially because they often do not bring immediate profit. Whether your investment is short term or long term, you will almost definitely be spending more after your purchase, rather than immediately beginning to earn.
It will likely require consultation with a professional, but it is essential that you have an understanding of what you can afford, and the mortgages you qualify for, before you begin house hunting.
Obviously, the decision to invest in real estate is a major one. But it is also one that pays off for many people. If you are committed to the idea of taking the plunge and investing in real estate, consider implementing these five tips and start taking action immediately!