If you are new to investing and are considering real estate, we have a few real estate investing tips to get you on your way.
The first thing you should do is to consult a mortgage broker. Brokers help people like you determine how much you should invest and how much you can borrow responsibly. Next, look for a real estate agent that actually invests in real estate himself. This important hands-on experience will give your real estate agent the knowledge that can help you make better decisions.
You will also want to do your own research. Look for properties that are in demand and will give you a positive cash flow. Those who make a killing out of real estate investing always do their own do diligence.
If you find property you like, make sure to have it inspected by a professional. If you are buying a condominium, have the entire building inspected. Just because your condo looks good does not mean that the building itself is in great shape too. If you don’t check, next thing you know you will be paying more fees than you thought because the building needs to be repaired.
Make sure to consult your lawyer and accountant. They will help you figure out how you should take ownership of the property. There are pros and cons of taking title in the name of a company and also in investing in your own name. It’s best to know your options so that you can make the right decision for your own circumstance.
Regardless of whether the property is in your own name or a company name, make sure to maintain proper records of your investment property. This will help you at the end of the year when you have to file your tax return.
When looking for tenants, make sure to do a little research on those you are considering. There are many horror stories out there where tenants have completely damaged properties or ran off without paying rent. Talk to previous landlords and make sure that there’s nothing suspicious in your potential tenants’ history. In that regard, you might also want to hire an experienced property manager who will deal with the maintenance, repairs, and any complaints. This could make your life much easier.
Our final tip is just plain economics: once you buy a property it becomes a sunk cost. That is, it cannot be undone and you should not use it to evaluate future decisions. Whether you continue to rent out the property or sell it, the decision should be based on what is best for your future.