Is Real Estate Investing for You?
5 Quick Questions to Consider Before investing In Real Estate.
As HGTV Real Estate shows continue to spring up, and with every "Guru" guaranteeing riches overnight. Many people are inquiring about the virutes of owning Real Estate as an investment tool. They ask about the different strategies, methods, and vehicles for acquiring, holding, and leveraging a property. Real estate is an intricate business that involves many different legal, financial, and personal aspects. The right real estate investment can be lucrative and life changing, but so can the wrong one. So prepare yourself.
Are you currently ready to jump into this lucrative, but complicated business? Think about these 5 essential questions before you make your first move.
1. How much money can you invest?
Investing in the real estate market requires capital of some sort. The initial amount of cash needed upfront to obtain a property may be large or small, it really depends on the deal and your position within it. However, once you assume ownership of the property, you are legally responsible for all or a percentage of the loan amount. Be sure you can afford to invest by looking closely at your personal financial situation. How much cash do you have? Savings? What amount of debt do you have and how much interest can your finances handle? There are plenty of options available, explore all the ways possible to fund your deals.
2. Are you afraid risk?
Risk and capital go hand-in-hand. Be honest, how much risk are you comfortable taking on? A large loss to a small investor has a much larger impact than the same amount to a wealthy investor with deep pockets. While risk-taking can be exhilarating, take a hard look at your finances and think about the level of risk that will be comfortable to you. Do you naturally enjoy taking chances, or do you tend to avoid risk? It’s essential to success to know your comfort zone.
3. What are your future financial plans?
Are you interested in investing to maintain capital or to get the highest return in the shortest amount of time? Consider the amount of time, money, and risk associated with each scenario. Be logical. A straight 15-20% profit over a couple of weeks might not be that realistic, especially when your a beginner. If you are interested in a high return, this usually means there’s a longer time commitment, which means your money will be tied up. The value of property can change quickly, leaving you in a higher risk situation. Always have Plan!
4. Do you have what it takes?
To be successful in real estate investing, you need to be detail oriented, a quick learner, and have excellent interpersonal skills. Networking and people skills will take you very far, you need to have the self-management skills required to determine what you need to know, then go out and learn it and then TAKE ACTION!!!
5. How much time can you spend?
Think carefully about how much time you can commit to the day-to-day tasks required to be successful in this business. Be realistic, because in the beginning, you’ll need to spend a lot of time researching and learning about the business. With every project, you’ll need to spend time working on legal issues, zoning and town issues, insurance, tax concerns, contracts, market research, financing. You can delegate these responsibilities later, but right now unless you have captial from the start, you will have to tackle some or all of these tasks.
If after considering these questions you are still interested in real estate investment –Congratulations!
This field is one of the most lucrative and satisfying ways to make a living.
Have questions? Let's talk!
