If you’re looking for a great way to add to your income, real estate may be right for you. This is an area where you can make a lot of money in a very short amount of time. But you should also be aware that with opportunity comes a certain amount of risk. Here are the best 5 tips for investing smartly and safely in real estate.
1. Make Sure You Choose the Right Location
The first and most important decision you need to make when investing in real estate will be to choose the right location. You want to be sure that the property you invest in will be capable of repaying your initial costs when it comes time to sell it. The rise in resale value that your property achieves needs to be as high as possible.
You not only need to look at the specific property you are thinking of buying but also the general location around it. What are home values like in that part of town? Are they on a steady rise or in the midst of a steep decline? If in a decline, what are the reasons behind this trend? The answer to this question will impact your decision.
2. Wholesale Properties Will Be the Better Deal
Another factor to consider when deciding to buy property from a luxury realtor to invest in will be whether or not you can get it at a wholesale price. This will be by far the more beneficial financial arrangement, especially for someone who is investing in real estate for the very first time. Wholesale properties are almost always offered at a large discount.
3. Make Sure You Comprehend the Tax Benefits
One of the biggest incentives that an investor can have for buying real estate is to take advantage of special tax benefits. These are offered by the government in order to clear the way for investors to buy up and provide as much real estate as possible to the public. Giving this incentive takes this task off the government’s hands.
As a result, investing in real estate will give you special perks such as being able to write off the depreciation of the property on your taxes. There are a number of other deductions that you can make. These may include deductions for property maintenance, insurance, expenses related to the mortgage you have on the property, and others.
4. Make Sure Your Credit is Good
The next thing you will need to do is check your credit report. You most likely don’t have enough cash on hand to pay for a property with at one go. A credit check will let you know if you are eligible to contact a bank or other source for a financial loan. This is the necessary move you need to make to enhance your credibility as an investor in real estate.
If you have any outstanding debts or errors on your credit report, you need to get them taken care of as soon as possible. These are stains on your record that could keep you from being able to invest in the property you are interested in. The cleaner your credit and the higher your score, the more easily you will be able to proceed.
5. Use the 1 Percent Rule for Rentals
If you are planning on investing in a property for the purpose of renting, you will need to make use of the 1 percent rule. This law states that a property you own must be able to produce 1 percent of the price that you paid for it. It must be able to do so on a monthly basis. If you paid $100,000 for a property, you should be getting back $1,000 in rent.
Make the Most of Real Estate Investing
The time is now for you to make the smart choices that will guarantee a solid future for your financial status. Investing in real estate can be the right move to get you where you need to be. There is a learning curve involved that you will need to get a solid grip on. Once you do, you can look forward to a bright and profitable career.
