Tuesday, June 3, 2014

Real Estate Investment Tips

Real estate investment can be extremely profitable! IF someone has the funds, then real estate will be one of their investment options.  If you are planning on investing on properties for profit in the near future, then you will find these 5 tips handy:

1.  Define Your Target Market

You have to identify what type of tenants you would like to have. Are they students? Young Professionals? Young families? This aspect is very important, because it will help you decide on which location your real estate investment would be.


2. Do Your Research 

Research is one of the most important step in investment - in any type of investment. You need to study the market trends before investing your hard earned money.  You need to do your pricing research (how much your target market is willing to pay), the best location, risk analysis and the CMA (Comparative Market Analysis). This will help you determine whether a property is worth investing on. 


3.  Focus on Promising Areas

Location! Location! Location! It's better to invest more money in a home located in a central area. Focus on finding your property in areas where people would like to live and raise their children.


4. Never Spend More Than You Can Afford

Golden rule in property investment - never spend more money than you have. Real estate investment is very unstable - it has its ups and downs.  Sometimes, you can earn significant amount of money but there will be times that you can lose money. You must be aware of all the risks in investing in real estate.  If you cannot afford losing money, then you need to set your budget and stick to it.  Overspending may lead to bankruptcy and it will not look good on your portfolio.


5. Negotiate a Price Reduction

Every penny reduced is a penny saved. The lower the price of your home the faster you'll get your return on investment.  Knowledge is power in negotiations.  Again, research will play a big role in negotiating for a price.  When buying a home, ask for a CMA (Comparative Market Analysis) to get an idea of the price of the homes being sold within the same area.  Use that knowledge to negotiate back and forth until you and the seller agree on the acceptable price for the both of you. 


If you're asking when is the right time to invest - a possible answer would be to invest in an investment property when the housing market is strong and showing signs of increasing appreciation.    It's also advisable to focus on median-priced investment properties (not too high, but not not too low) as long as they are located in central areas with high rental demand.  Contact us today for more information on the current housing market and available properties.