It’s no secret that real estate is one of the better investments you can make. If you read any blog or book about the best ways to invest your money and build a healthy financial future, then it won’t be long before you see someone who’s making the case for property. But of course, while real estate can be a profitable area to invest in, it’s not as if success is guaranteed. Far from, in fact. There have been many people who have gotten themselves burned through this type of investing. To improve your chances of success, then it’s important to keep some smart tips in mind. We’ll run through a bunch below that’ll increase the likelihood that your real estate investment venture will be profitable.
Know the Area
There are properties all over the world, but should you invest in them, no matter where they’re located? It’s a mix of yes and no. In general, it’s best to veer towards ‘no.’ By focusing on your home area, you’ll be able to draw on extensive knowledge of the streets, homes, neighbourhoods, and other key factors that’ll determine how much you can charge for rent. However, though you’ll want to spend most of your time and energy on areas that you understand, it is possible to look at opportunities elsewhere. Or at least, you shouldn’t automatically reject a property just because it’s not in your postal code. The key thing is to conduct as much research as possible. Remember that the valuation of a property is about much more than just the condition of the house — the location plays a massive role, too.
Your Niche
There are different paths towards real estate success. One of the key decisions you’ll have to make is to decide how you’re going to get there. This usually begins by deciding what your real estate “niche” will be. It could be you want to rent high-end properties, homes for families, or to students. Once you’ve figured this out, you’ll need to look at the specific details and rules for the process. For example, if you’re going to rent a property to students, then you’ll need to know about HMO, or House in Multiple Occupation; a HMO guide will run you through everything you need to know. While you may want to dabble in letting properties in different areas from time to time, you’ll find that having a particular calling to one type of property rental serves you well in the long run.
Get Your Finances Under Control
You’ll find that everything runs much more smoothly if you have a solid grasp on your finances. While there’s a lot of potential to improve your finances on a long-term basis, there’s no avoiding the fact that there can be a lot of expenses that you need to pay too. Indeed, this is something that many people overlook. It’s not just the cost of the mortgage, but also taxes, maintenance, all that stuff. One of the best gifts you can give yourself is to get the basics of accounting under your belt. You can learn this pretty quickly, yet it’ll be something that you draw upon again and again.
Learn Some DIY
One of the best ways to keep your costs down is to learn some DIY skills. As with accounting, actually as with all things, this is something that anybody with a little time and patience can learn. The advantage of doing so is that you’ll be able to handle some of the jobs related to your property yourself, rather than having to hire someone else to do everything. Of course, the big jobs like the electrics and things should always be left to others, unless you’re specifically trained in those fields. But the non-dangerous jobs? They should be done by you. As well as saving money, it’ll also just save time, since you won’t need to go through the process of finding someone to do the work for you.
Work with the Best
You can’t build anything truly special on your own. You’ll always need other people, to varying degrees. While it can feel as if investing in property is something that you do on your own, the truth is that you’ll likely have to call upon others from time to time. And not only have to, but actually want to — it’s in your best interests. There are two specific areas where you should focus on bringing in the best people possible. One is with the jobs you need to be done. This is maybe less about “the best” (unless you’re renting high-end properties), more about finding trustworthy people. For the professional roles, such as your financial advisors, you will want to find the best that you can afford, since their expertise can make a big difference.
Rainy Day Funds
One of the tougher aspects of becoming a landlord is maintaining cash-flow. There can be many surprise expenses that can cause complications if you’re not ready for them. The smartest way to prep yourself is to build a rainy day fund, a stockpile of cash that you can use as and when it’s required.
Screening Tenants
Not all tenants will be good ones. You can prevent many headaches and complications by coming up with a screening process that puts high-quality candidates into your properties.
Treat It Like a Business
Finally, remember that if you’re going to find long-term success with your real estate journey, then it’s important that you take it seriously. If you treat it as a small side hobby, then there can’t be too many surprises if it doesn’t turn out well. Treat it like a business, on the other hand, and you’ll have the correct frame of mind for success.
Conclusion
As we said at the beginning of the blog, real estate investing can be profitable, but success is far from guaranteed. It’s really important to follow the best practices; they will be your best defence against the pitfalls and dangers of real estate investing.
