Real Estate Investing – Is it Right for You?

Written by Posted On Thursday, 27 April 2017 02:41
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As the market begins to recover, real estate begins to look like a better and better investment opportunity. And that is true. It is also true that there is a lot that can go wrong, and with the amount of money you are risking, it is good to spend a little time researching it. Here are a few things to consider before you sign on the dotted line.

What’s Your Plan?

People will stumble upon a good deal and buy it, then try to decide what to do with it. The world of real estate is full of good deals, but it’s usually best to pass if it doesn’t fit your overall investment strategy. Maybe it’s a good house to flip, but your plan calls for building a core of rentals. Now you have to invest time, energy and money into doing something else, sucking those resources from your other investments. Without realizing it, you are risking the big picture for a morsel on the side.

Sometimes investors get too attached to a property that looks really good. Soon they are manufacturing justifications for buying it rather than letting the plan justify the purchase. When you buy your own home, this is okay. When you are investing, you’ve got to take a good, hard look inside yourself and not let your emotions get the best of your rational brain.

Keeping yourself occupied with searching for lots of properties and making multiple offers is a good way to avoid this pitfall. Make a clear plan and then go out and look for properties that fit that plan.

Do the Analysis

Paying too much is the fundamental reason people in real estate don’t make a profit. The profit is established as soon as the buyer signs the purchase agreement. When the buyer performs a careless analysis, the costs can wind up exceeding the estimate and the result is that the anticipated profit goes poof.

Make a serious effort to educate yourself on the fine points of real estate investment. Read up on it. Find and join a local chapter of the National Real Estate Investors Association. This will put you in touch with people who do what you want to do and provide an opportunity to learn from them. There’s nothing wrong with finding someone near you who owns a lot of rental properties and calling him up for advice. You’d be surprise at how willing people are to talk about what they do successfully.

Build Tour Team

Nothing in the real estate is an individual effort; everything is done by a team of experts. If you do not have a relationship with a real estate agent, an appraiser, an inspector, a real estate attorney and a lender, you are not ready to invest in real estate. Just knowing some people who seem to know a lot because they talk about it isn’t enough. You wouldn’t buy a house because you heard from a Walmart employee that it was a good idea, would you? (Nothing against Walmart. In fact, they can help you compare prices for a lot of things a landlord needs. But you get the point.)

If you plan to invest in rental property, you need to have the resources ready for remodeling and maintenance. You need a plumber, a roofer, an electrician, a painter, and someone who can do air conditioning and HVAC. Who’s going to handle flooring and carpeting? What about landscaping? You should know a good handyman.

Be sure you have all these talents in your rolodex before you invest.

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Narendra Sharma

Naren is an interior designer and real estate expert. I’m grateful everyday to my wonderful clients who have entrusted me with their homes.

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