The average annual return on real estate is more than 10%.
But that’s only true for real estate investors who make smart choices and know when to fold – and the average ROI is misleading for new investors because many investments are made by real estate investment firms with decades of experience under their belt.
But don’t worry. You’ll find our best real estate investing tips below.
Top Four Real Estate Investing Tips for Smart Investments
Investing in real estate is a big financial commitment. Making the wrong choice can cost you dearly for years to come – and a bad investment can damage your portfolio indefinitely.
Tip #1: Plan in Advance
To make the most of current real estate trends, you need to come up with a business plan:
- How will you identify properties to invest in?
- How will your investments turn a profit?
- What professional services do you need?
The services you employ might include agents for the scouting and buying phase, lawyers to finalize the paperwork, and real estate management properties to handle the day-to-day management of your assets.
Tip #2: Widen Your Net
To make the most of your investing strategy, you should cast a wide net. The smart investments might be just across state lines – or they might be on the other side of the country.
Investing in emerging neighborhoods can be a risky bet – but those are often the ones that turn the highest profits. Remember to understand and account for crime rates, which affect vacancies and values, as well as
You can view here for more tips on finding properties to invest in.
Tip #3: Build a Network
If you’re here, there’s a fair chance you’re new to the real estate investment practice. Finding like-minded people and potential mentors will teach you many of the pitfalls of property management, saving you time and money.
You’ll also meet people with similar interests and experiences as you, giving you a new way of making friends and connecting with people.
Tip #4: Understand the Risk
Investing in real estate is a time-tested way of turning a profit. But that doesn’t mean it’s entirely without risk.
You’ll need a reserve fund to fall back on for unexpected repairs and maintenance or for extended vacancies. While having year-round tenancy is what every landlord desires, the reality is that you’ll have to deal with empty properties, bad tenants, and dry spells.
One of the best ways of minimizing your risk is to hire a property management firm. Property firms deal with the stress of finding new tenants and managing the property. They’ll also increase the likelihood of securing long-term tenants who provide a return on investment for longer.
Grow Your Portfolio
A profitable real estate portfolio isn’t built overnight. Keep these real estate investing tips in mind while you’re drawing up your business plan and remember that there’s no need to rush.
The good things come to those who wait.
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