Real estate investing can be an overwhelming experience for first time investors. As a new investor, you are probably aspiring to earn a great deal of wealth while taking risks as minimal as possible. While there are no textbook formulas to succeed in real estate investing, there are quite a number of tried and tested strategies along with a few telltale signs you’re on the right path.
To accomplish your real estate investment goals, you ought to play smart and make wise choices while dealing with purchases and sales. While you may not hit 10 / 10, you can surely alter your path when doubt creeps in. But, how do you know you’re on the right path? And what optimal scenarios should you try your best to stick to?
Scenario # 1 – Fair Cash-on-Cash Returns
When you invest in real estate, you channel your liquid financial assets (stocks and bonds) into an illiquid asset (real estate). While you were safely earning a 4 or 6 percent interest on your financial assets, you are risking those earnings when you make a real estate investment. However, if you and / or your financial strategist have come to the conclusion that your potential investment can give you the same or more than those returns, you are in a safe zone.
Ensure you do not base your conclusion on assumptions; consider all the financial inputs you will have to make and the output you’re receiving before you seal the deal.
Scenario # 2 – Minimal / No Risk Zone
Real estate moguls will tell you that residential real estate is the safest investment arena for both beginners and professionals. Why? Because there will always be a demand for housing irrespective of the fluctuations in the economy.
A minimal / no risk investment would involve a residential property in an upcoming / recognized neighborhood with easy access to schools, playgrounds, shopping centers, major transit routes, airports and commercial hubs.
Scenario # 3 – Lower Personal Investment
There are a number of properties on the market which require the investor’s time. You will find a host of properties on the market which need remodeling, management and surplus advertising before it is finally taken off your hands. Such properties include housing for college students, low quality properties in bad neighborhoods and vacation rentals.
The lesser personal time that’s required of you, the better the investment is. However, do not expect to make a successful career without contributing any of your time. Real estate investing may be easy; but every investor must contribute in some way or the other towards making the investment a success.
The best real estate investments are made with hard work, research, smart decisions and knowledge. Keeping yourself abreast with the latest real estate news, meeting local real estate agents, scheduling appointments with investment moguls and attending seminars are some of the best ways to help you get started in the industry. Once you’ve found your footing, you can proceed to make it big.
