When people think about the best investments they always talk about the stock market and IRA’s and shy away from real estate because of the current economic situation. In reality now though, now is one of the best times to invest in real estate. It’s easier than ever to get amazing returns on the money you put in. Unfortunately it’s not as hands off as some of the other investment methods. Below are three tips to help get you moving in the right direction for investing in real estate.
- Real Estate Agent – A lot of investors think that they can save money by not using a real estate agent. When you look at the numbers you do save a bit of money by not having to pay a commission to the agent. That commission you pay to your real estate agent is defnitely worth it however, especially when it comes to investment properties. Real estate agents have connections that most people don’t have and can spot deals and give advice that even some of the most seasoned investors can’t.
- Keep It Simple – Don’t get sucked into buying to many properties at one time because they all seem like good deals. If you are a beginning investor and you purchase your first property to rehab and then sell I’m sure you’ll continue to look at other investments and I can guarantee that one will come up that’s “the best deal ever”. As hard as it is, pass on it. It’s easy to spread yourself to thin, especially at first. After you’ve done a couple of deals and made some money, then you can tackle multiple properties.
- Budget – Budgeting is key to making money on an investment property. It’s a simple formula to follow. You purchase a foreclosure property for $20,000 dollars, you invest $10,000 dollars into repairs and renovations and you sell it for $60,000 dollars giving you a $30,000 dollar profit. The tricky part comes when you start to go over that $10,000 budget, believe me it’s very easy. Then if you overprice the house a bit and end up holding it for a few months you have those carrying costs. It all adds up over time and pretty soon you did all that work and only made $5,000 dollars.
While some of these tips probably seem simple and aimed at beginners, they’re not. I’ve seen it happen over and over again to seasoned investors. They forget to stick to the basics and end up loosing money on deals instead of making money. The economy really lends itself to real estate investments right now and that’s why it’s one of the best investments for 2010. You can get foreclosures for cheap and resell them to first time home buyers, it’s a win win for everyone.
