Real estate is often the market of choice for many beginner investors. Real estate is a well established market that is accessible to anyone without requiring expert knowledge. As a result, the average homeowner prefers to invest in property first. However, the seeming ubiquity of real estate investments leaves the door wide open for making mistakes, especially by beginners. So if you are a new investor with the eye on the property market, here are several important tips to follow:
1. Expertise Unnecessary, but Research is a Must.
If you invested in the stock market, you will need to know a thing or two about trading stocks and algorithms. You do not need such technical knowledge to become a real estate investor. But you should not interpret that fact as a reason not to do research. Even if you don’t need to know the algebra behind the market, you do need to know what’s propelling the market. Read real estate news and keep track of property and related stock values. You will also need to do research on properties as well, such as learning about backgrounds and the neighborhoods they are located at. Such information is crucial to making a good deal.
2. Consider Direct Ownership vs. Buying Shares
Direct ownership of property is the conventional method for investing in real estate. You buy a building then rent it or sell it at a higher price. Doing so requires a lot of work and responsibility. Most new real estate investors are not established enough to flip properties on the market. Those that choose to lease or rent will also need to keep up with serious legal responsibilities. If you are not ready for this level of commitment, you should consider investing in a REIT. Basically, with a REIT, you will be buying shares on multiple properties owned by other people. You do not have to worry about maintenance costs, legal fees and such that property owners have to worry about. Therefore, a REIT is always a good option for those who are just starting out as real estate investors.
3. Delay Big Purchases
As mentioned above, direct ownership of property requires a lot of work. You may not be ready for such work yet. Therefore, it’s not wise to spend all your money and buy a massive building the moment you become a real estate investor. Do not make any big purchases for at least the first two years. Spend some time getting to know the market before you dedicate all your finances to it.
4. Build Relationships
Investing is all about networking. You cannot know which properties are lucrative and which are not without being friends with market insiders. So, make friends with other real estate investors, agents, brokers and related parties. This is the only way you will know what’s about to go down in the market. Your network will also be able to warn you of possible scams and spurious agents in advance.
Also, don’t forgo writing down a business plan. It will keep your financial goals in focus.
Investing in real estate can only be lucrative if you are smart. Otherwise, you will just lose all your money on a bad deal. Therefore, pay close attention to the advice given above.
Hannah Ford says
Thanks for sharing your thought on the real estate investment which I think would be very useful for beginners. Newbies often ignores certain factors while investing in real estate which could cost them a lot of money. Factors like location and quality of the property plays detrimental role in such kinds of business. So, beginners should do a lot of research prior to the investment in real estate business. Investment in residential property is simple. However, investment in commercial property is too complex form of investment for the beginners and one should be very careful while investing in commercial property.
Ellie Page says
Nice article. I like your tips to conduct a plenty of research prior to investing in real estate business. By doing so, one could get in-depth information related to the real estate business which could be very helpful to make a profitable business. However, a passive investment in real estate business through the real estate investment company could be very profitable with little or no stress. But it is really essential to select a real estate investment company after conducting a lot of research.
Amanda Drew says
It’s good that you point out that investing is all about networking because then you’ll be able to know about which properties will actually be lucrative. I’m planning out how I’ll set up my savings, and I want to make sure to do a number of different investments in order to facilitate my savings and help them grow. Your tips should really help me find a way to get started with real estate investments.
Mark Padolsky says
Navigating your way through the world of real estate investment can be a bit tricky. Here are simple tips for beginner real estate investors on how you can make wiser choices!
Thanks, Robert for your valuable pieces of information.Your points are simply outstanding to understand the core value of real estate buying.Your described points are effective and it has changed my perceptions too.I must appreciate your vision on “Expertise Unnecessary, but Research is a Must”.The matter is very helpful for clear understanding.As a new investor, it helps me a lot on my buying decision.
Thanks for this info! Getting into the real estate market shouldn’t be taken lightly, so I definitely think buying shares initially is a safe way to invest without all the legal risks. Great post!
Great post! These perfect for those who many be new to real estate investing! And you make great points on building relationships, since networking seems to be key in being successful in real estate. Thanks for sharing!
Georgia B says
I like your tip on delaying big purchases. Like with any business venture, I think it’s smart to make baby steps to allow yourself to learn as you go. If you jump ahead and make a huge real estate purchase right at the beginning, you might be biting off more than you can chew and end up not being able to catch up. Making a smaller purchase will let you test the waters and figure out what works best for you.
Johnny McCarron says
I love your emphasis at the end about the importance of being smart when investing in real estate. As you said, it can be quite lucrative if you know what you are looking for. Do you have any advice about seeking professional help when investing in real estate? I may need to buy something soon, and I really want to be sure that I am making the right decision.
Nice post! Thank you for sharing. I’d like to hear more from you.
Being people-oriented is really a big plus in real-estate investments. Notice that most of them are really friendly and very approachable have so many friends. They know how to build mutual relationship.
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I definitely think research is key. Talking to other investors, people in finance, reading up on the topic, etc. is important – you don’t want there to be any surprises later on. Great tips, thanks for sharing!
Rela estate investing seems like “in” nowadays. I have known some people who just started investing in this market, and it seems like they are completely satisfied and have earned some money in return.
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