Investing your hard earned money is a very important and crucial decision. There might be hardly any person who is content with whatever money they have. Everyone wants to be rich and famous, at least the former if not latter. There are many ways to become rich. Some people go the long way by working hard, spending less and saving more. But in modern times, looking at the world economy it is next to impossible to be super rich this way. At most you can climb up to upper middle class.
But as Robert Kiyosaki says in Rich Dad Poor Dad, “don’t work for money, let money work for you”. Investment of your earnings in share market is one intelligent way to become rich. But it is risky too, as the whole outcome of your investment depends on market situation. And it is observed from many real life stories of investors, that the best and the safest category of investment is Real estate.
Proper education of real estate is necessary before you start. Jeff Adams presents some important do’s and don’ts before you delve into the real estate market.
Know what you want
- While looking for a land or any property to buy, first you need money. But the money you invest should be the surplus stock which is left after you minus all taxes and household expenses from your income. So first check your financing options. Check the source of money, whether it is reliable or not? And then, start the hunt for property. Check out all types of properties for sale and rent. Do a thorough research on the properties and their rates area wise.
- Don’t be lethargic or ignorant as one small mistake can put you in dilemma for years. Once you have finalized the property you want to buy, check out the condition of the property before finalizing its cost. Check whether the property is completely untouched (new), or it needs some fixing, because that will affect your cost also. If the property requires fixing then you should bargain more to lower its cost, because you are going to spend money on the repairs before reselling or renting it.
- Decide what type of investment you want to do in that property- short term or long term? It means that if you want to buy a property at some rate and in a short time you want to sell it at some profit margin or rent it for a monthly rental income then it is called short term investment. If you purchase a property and let it sit for long time and build its equity, it is called a long term investment.
Some common mistakes you should avoid
Many times while investing, investors don’t pay attention to some important aspects of real estate investment and they suffer. To do successful real estate investment, you should keep the following points in mind:
- Don’t forget to screen all tenants.
- Consider taking enough cash flow.
- Take care that you have proper insurance policy.Look out for special loan programs.
- Don’t hold on too long on a rental house that won’t sell at a profitable price.
- Don’t think about short term when you ought to think of long term.
- Establish some minimum requirements for tenants.
- Regularly inspect your property.
Myths & Facts about real estate investing
Myth:
You don’t require money for investing.
Fact:
Of course you need money to invest. It doesn’t need to be your own money, it can be of your family, friends, money from retirement savings, or other private funding. But there is definitely a lot of cash required in real estate investment.
Even if you make the cheapest of deals and get into no down payment schemes, you need some cash for legal fees, repairs, maintenance etc.
Myth:
Cash flow is the most important thing in real estate investment.
Fact:
If you focus more on your real estate goals, then you need not worry about cash flow. Do not buy a property only for appreciation; instead buy properties which will grow themselves over time and in which less maintenance issues come up.
Myth:
Buying an ugly house on a good street will give you good money.
Fact:
Even if surrounding houses are beautiful and well maintained, if your house is ugly then don’t think that you will get as much value for selling or renting your property as they do. So if you are planning to sell it then make it pretty to retain the competition or else this ugly house will not fetch you a good price or good tenants for long. And if you are planning to buy such a house then thinking that it will somehow build its value on the basis of locality, you are running into a pit.
So bust the myths of real estate investment and make wise decisions, to be a successful investor.
