4 Ways to Get Started in Real Estate Investing
Even people who consider themselves experts in the real estate market, lenders and realtors, find real estate investing is a whole different category. They learn rules about investments, which would have made the challenges easier if they had known about them in the first place. Here are four basic rules that don’t change even when the market fluctuates.
- Don’t Look for the Perfect Time
Or even the right time. You can watch the market, do your research and look for the perfect opportunity, but you’ll never find it. If you have the funds and you find the right property, go for it now.
Keep it simple in the beginning with just one or two properties. Once you have those in your pocket, they will start earning you money, which provides you with the capital you need to expand your investments.
- Get Bigger Faster
While it’s okay to start small, you don’t want to stay there. As soon as you understand the market with a little real-life experience, look for larger properties. These properties will do more for your portfolio and will appreciate quicker.
When comparing real estate to the stock market, you need to keep two things in mind. First, investing in either one costs about the same if you do it right. Second, no matter what happens in the real estate market, you still have a tangible asset to utilize.
- Don’t Sell Too Quickly
One temptation is to sell an appreciating asset as soon as it starts to make money. You want to make a return, but it’s far better to wait. The longer you hold on to the property in a hot market, the more value you’ll have.
Instead of just looking at appreciation, learn to read the market forecast. As you watch these forecasts, you’ll become experienced at determining when it’s time to sell. Just look at some of the big markets like Houston, which have blossomed since the housing crisis with properties values double what they were just three or four years ago. If you invest in areas with highly dense populations or neighborhoods that are up-and-coming, you’ll see this trend continue. The result is more money for you if you sell at the right time.
- Use an IRA to Invest
When many people invest in real estate, they look at the funds they have on hand. A better option is to use a self-directed Individual Retirement Account (IRA). It works the same as a regular IRA, but it allows you to choose alternative options for investing your savings. You can learn how it works at almost any bank. It allows you to save your taxed income for other uses. Just remember not to take all of the money from your retirement for this investment.
These rules work regardless of where you’re investing, how much experience you have or how much money you’re putting towards the investment. If you remember them, they will save you a lot of headaches.