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For many individuals who want to start investing, the real estate market is often quoted as one of the safest ways to do so. From celebrities to investment bankers, real estate is one of the most popular investments around the world. However, just because real estate tends to be a safer form of investing than trying to gamble on the stock exchange or purchasing speculatory cryptocurrency doesn’t mean investing in real estate is a foolproof way of making money.
If you don’t know what you’re doing, you might quickly find yourself losing money, sometimes even more than you put in. So, if you’re thinking about investing in real estate, here are three tips to help you get started without making a catastrophic mistake.
Purchase Properties in an Emerging Neighborhood
You may have heard that when it comes to real estate investments, location is king. This doesn’t mean, however, that you should automatically look at purchasing real estate in the most expensive or most prime location in an area. While it’s true that property in these locations tend to appreciate significantly over time, many people can’t actually afford to buy real estate in the most luxurious neighborhoods, at least without becoming over-leveraging their assets.
Rather, look into purchasing property in emerging neighborhoods instead. These are areas of a city that have the potential to become hot neighborhoods. Look for neighborhoods near a subway station that’s currently being built, or one where lots of job opportunities are opening up nearby. Properties in emerging neighborhoods tend to be less expensive while enjoying huge growth potential and have loads of opportunities for an investor to rent the property out while waiting for it to appreciate.
Diversify Investments
Another vital tip for starting to build up a real estate investment portfolio is that you should try to aim to own a number of holdings across a diverse amount of locations. Placing all your holdings in one neighborhood or even one city places you at risk of losing a ton of money in case the regional housing market crashes. By purchasing a number of properties across different cities or states, you can minimize your risk while opening yourself up to a larger amount of available investment opportunities.
Before you purchase property in different markets, however, you should be sure to do your research and figure out where the ideal neighborhoods and areas to invest in are. Since you’re investing in an area far from where you live, you might not be as familiar with the regional investment opportunities as you are closer to home. As with all investments, make sure you do your homework, not just on the quality of investments, but on regional differences in property tax and regulations for renting and other legal matters that differ by jurisdiction/
Stay on Top of Maintenance
Finally, once you’ve made your investments you should be careful to maintain them properly. If you just let your properties sit empty, you run the risk of ignoring early warning signs of home maintenance problems that could cost you a fortune to repair if left unattended. If you’re renting your investment properties, consider writing an annual or bi-annual maintenance inspection into the lease when signing with your tenants. That way, you’ll be able to check up on property later on, both securing the value of your investment and the health and safety of the tenants.
Whether you’re a novice investor, or you’re a seasoned pro who would like a little more extra advice, our team of real estate investing experts is ready to help you. To learn more, please do not hesitate to contact us today.