Real Estate Investor: Tips for Getting Started
Published on: 15 Jun 2024
If you’re looking for a non-traditional asset to invest in, real estate investment is one of the best choices you can make. Although at times, it can be tricky to navigate. That’s why we offer some beginner-friendly tips and advice and mistakes you should avoid to become a successful real estate investor.
Let’s begin with types of real estate investing. The most popular ones are residential, commercial & industrial types of investing.
Though investing in real estate is expensive initially, it will reap heavy benefits for you in the future, especially if it is done correctly. The two ways of making money in real estate are:
- Value Appreciation: This is a common occurrence in real estate. Over time, property values have increased in time, and this constant escalation is called value appreciation. Property values most likely go up due to the neighbourhood it is located in. Therefore, consider investing in a home located in a good neighbourhood or even in an up-and-coming area.
- Rental Income: By renting out a home you own, you earn a consistent monthly income. Once the property mortgage is paid off, this income can become pure profit after repairs and maintenance are paid off.
Real estate investing can be risky to those not familiar with the industry. Here we list out a few strategies that can help you whether you are new to the market or are a seasoned investor.
1. Research is Must:
Start by having sufficient knowledge about real estate news, stock values and property rate fluctuations, quality of the neighbourhood, recreational facilities, and overall affordability of the home.
2. Understand Real Estate Financing:
This tip is beneficial when you have a good credit score to finance a rental property. If you lack necessary financing options, you can choose hard money loans and owner financing, not to let lack of funding affect your investment opportunities.
3. Choose the Market & Timing Wisely:
A good thumb rule is investing is avoiding hot markets. Instead, find markets that are expanding - good affordability, rising sales & prices, and higher capital investment.
4. Pick the right developer:
Examine a developer’s track record thoroughly, and financial credibility must be step one for this tip to be helpful. Ensure that you deal with well-known developers who are RERA certified. This will establish that projects are safe to invest in, have good facilities, are located in a good neighbourhood, and are an excellent option to invest in.
5. Manage Risks Well:
While buying an investment property for sale, set aside 10-20% as it yields a lower interest rate on a loan. The second best way of managing risks is to have a significant cash reserve for unexpected expenses and an unforeseeable future.
To give you a better idea about the benefits of real estate investing, we have listed out a few pros and cons of the same:
| Advantages | Drawbacks |
|---|---|
| Tax breaks & deductions | High Investment |
| Equity & Wealth | Capital Gain Tax is Applicable |
| Real Estate Leverage | High Maintenance Cost |
| Real Estate Investment Trusts (REITs) | Not a Liquid Investment |
| Diversification of Assets | Requires |
| Great Inflation Hedge | Variable Income |
| Saves Income Tax |
Real estate investing can be a great opportunity if you are aware of minimizing your risk and maximizing profitability. It offers you the option of benefiting from cash flow, tax breaks, building assets, and hedging against inflation. Real estate will also enhance your portfolio whether you invest in REITs (Real Estate Investment Trusts) or physical properties.
Are you looking to learn more about investing? Opt for quick consultation from a real estate consultant like EstateMint. Choose from a range of our services to help you with the right decision.
Get in touch with us today!
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EstateMint is one of the leading Real Estate, and finance consulting firm having its operations in Pune. EstateMint’s strength is based on years of expertise in Real Estate and Digital Marketing with their cutting edge technology platforms and research tools which deliver the rich knowledge in the field of Real Estate and empower customers to make informed decisions.
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