Real Estate Investment for Beginners

Real Estate Investment for Beginners

Keeping your portfolio diverse is one of the best ways to maintain security and confidence in your assets–you are not putting all of your eggs in one basket, and therefore you are managing your risks better. It’s one of the smartest ways to go about your investing career.

Many investors are attracted to real estate as a way to counterbalance their stocks, bonds and other less tangible securities. Real estate investment can be a good way to diversify and earn high returns, as property values have tended to increase over time.

There are many ways to go about such an investment, but there are two major ways to make a profit. First, investors make a purchase with the expectation that its value will rise. That may be due to time, increased desirability of a location, or active improvements. The investor builds equity, then realizes profits by selling for more than they’ve paid for.

The other way to generate income from an investment property is to charge tenants for the use of the space. These tenants may be individuals or families for a residential property, or businesses for a commercial property.

If you want to earn rent, you may want to invest in making your properties livable spaces. You can have structures built if you are only initially buying a piece of land, or you can renovate, remodel, revamp and furnish already existing structures and sell them or rent them out for a profit. If you are planning to buy to refurbish, then sell or rent out your real estate investments, you can establish a reliable cash flow, as long as you can keep vacancies at a minimum.

The following are some of the best ways to ensure earnings from your real estate investment:

1. Build a strong team.

Build a strong team, work with smart people

Do your research and be selective when bringing on builders, management companies and anyone else who will have access to your property or tenants. If you don’t want to manage the building yourself, choose a property management company with a reputation for keeping their properties maintained, keeping their clients happy and providing good service. You should be able to rest assured that your investment is in good hands. Talk to property owners and tenants to get an objective point of view. If the company is not generally held in high regard, you may want to consider other options.

Real Estate Investment for Beginners

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2. Find a good location.

Find a good location, location location location

Residential renters prioritize a location near a commercial area or their particular place of work. Others may consider whether the property is near schools, places of worship; sports facilities or other recreational areas, shopping complex, restaurants, or local attractions.

The neighborhood is also an important factor. Is it safe, quiet and generally situated in a secure area? You wouldn’t want to invest in property with a bad reputation or near suspicious activity. This is especially important if you are investing in a family home — your location should be considered child-friendly by the parents who are going to rent it out.

If your piece of real estate is centrally located and fits all of the criteria mentioned above, you have a good chance of maintaining a steady demand for your space and minimizing vacancy. This means a steady cash flow for you. You can also charge higher rates, generating significant margins for you, because of the premium renters place on a good and safe location.

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3. Be diligent with upkeep and maintenance.

Be diligent with upkeep and maintenance, keep your property at its top shape

Make sure that everything is working well and all systems are in place. Your renters want their home to feel like a refuge, so make sure that all utilities, plumbing and appliances are working reliably. Give them referrals to cleaning and repair services so they can also have minor things fixed on their own. Convenience, cleanliness and solid upkeep make it easier to market your real estate.

4. Choose good home insurance.

Choose good home insurance, protect your property with proper insurance coverage

To provide security against any unforeseen events, you will need home insurance for your property, and your renters should be insured, too. Policies should cover the home owners for theft, disasters such as fire or storm damage, heating or cooling problems, or plumbing complications. Depending on your location, it may be a good idea to add coverage for earthquakes or flooding. A comprehensive policy will give you peace of mind, ensuring that you do not lose your entire investment.

It is tempting to choose lower-cost policies or forgo certain types of insurance in order to increase your profit margin, but this is one case where realism is better than optimism. People, pets, and nature can be unpredictable, even beyond the natural wear and tear that your property will undergo.

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5. Furnish your property appropriately.

Furnish your property appropriately, decorate your property

First impressions matter. When  marketing your real estate, it may help to furnish your space as best you can, giving a sense of value and aesthetics to your prospective tenants. While this is especially important for furnished rental units, vacant units that are properly staged will appeal more to renters.

You don’t have to break the bank. Basic furnishings can be minimal but charming. You can make use of what you have and furnish with fixtures that are affordable yet tasteful.

Cover the basics such as repainting the walls and fixing the flooring, roofing and tiles. Make sure every room looks clean and bright, well-lit and fresh. Install curtains or blinds in windows as needed. Conduct regular inspections and make sure that everything is fixed and working properly. Doing so will prevent the need for bigger repairs later on.

With plenty of planning, you can maximize your chances for success with investment real estate.  It may be meticulous work, but it will help you to maintain a healthy portfolio. I hope you find this article helpful. If you do, please share this article’s URL with on your Facebook or Twitter with others who want to invest in real estate so they can benefit from it as well. Thank you in advance!

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Jamshaid Ali is a Real Estate Investment Consultant for nearly a decade. He occasionally shares his experience through writing to help people make the right investment decisions. Read more >>