If you are considering investing in real estate for the first time, there are undoubtedly things you do not know about the process or the new property you are considering. In order to protect yourself and your finances from future unforeseen issues and expenses, here are a few tips to consider before you sign on the dotted line.
Emotions may run high when you are considering making your first real estate investment purchase. It would be wise to take a step back, however, to get a glimpse at the broader picture. Acting hastily could lead to costly oversights that could waste your time and cost you money. When involved in an auction or negotiating with sellers, know your numbers and make certain to not exceed your own set purchase price. Make certain your decisions are rational and not based on your gut feelings. Again, acting with your head, not your heart, will help in preventing a decision fueled by emotion and not your best interests.
As they often say in real estate, "location, location, location." If you are able to purchase a property that you suspect will yield a profitable return once taxes, maintenance and insurance are covered, you may be able to see a good return on your investment. With that said, it is important to look at the location fully, not just during the day, but early in the morning and late at night as well. Understanding the neighborhood will also help determine whether the property's location is sound.
Investing in real estate can be a profitable business venture if done properly. In order to avoid the potential pitfalls when investing in residential real estate, it is a good idea to become familiar with real estate law. With proper management and the necessary insights, you can avoid unnecessary costs.
Source: Forbes, "How To Ensure Your First Investment Property Isn't A Bust," Forbes Real Estate Council, Aug. 14, 2017