Real estate investing. It is a popular subject right now, considering that the housing market has skyrocketed since the pandemic began.
Some of you may have decided to get in on investment property during this time. Others may still be considering it.
There was a home-price gain of $68,843 in 2020, the highest in 15 years.
But, what does it take to be a successful real estate investor? These are some tips.
1. Know the Market
Study what the area around you is looking like. Are houses in the neighborhood getting bought left and right? Or are they still for sale months later?
Knowing what the town or city you are in is looking like in the housing market, and its economic standing, can help you determine if you will see a return on a house in that area.
For example, in 2020, a real estate investor most likely profited from owning a house that was within 30 minutes of a major city. One of the biggest examples was New York City losing 10% of its people while nearby Hudson County gained 88%.
If you catch those market trends early, it can land you a very nice return.
2. Know the House
Know what type of house you are buying. How many bedrooms does it have? How many bathrooms?
What is the backyard space? Does it have a garage or a shed?
These are things that you need to consider: the interior setup of the house, the material it is made out of, what type of architectural style it has, etc.
You need to have a good idea of where you stand on all of these things to properly figure out who you will eventually sell this property to.
3. Know the Tax Benefits
This is one that a lot of savvy real investors take advantage of, and it can make a big difference in how successful you will be at this.
One of the biggest benefits is the 1031 exchange. This allows you to avoid a tax on any profits you receive by selling a property, as long as you buy one that is equal or greater value within six months.
4. Know When to Walk Away
An investor needs to remain disciplined. You need to know when a deal is not worth it, and when the risk becomes too high.
An example could be that there are too many unknown repairs, or the repairs are too extensive to be worth it. Also, the original seller may just want too much money for you to be able to turn around and profit from the property.
5. Know the Laws
This is especially important in stricter states and cities. You need to know the local laws for where you are interested in buying property.
These laws can either make it easier than the national average for you to own it, or it can make it a burden on you.
Do your homework on these laws. They may come into play when deciding to get involved with property in a specific area.
Become a Real Estate Investor
These are just some of the ways to be a good real estate investor. Do you think you can handle this? Are you ready to get started, or take the next step?
Contact us from 9 a.m. to 5 p.m. Monday through Friday for more information.