With real estate TV programs being more and more popular each day, many have become interested in entering the industry. However, it's worth noting that actual real estate investing is hardly what you see on TV. There are certain risks involved that can, often, counteract the profits. For those with little-to-no-knowledge of how everything works, things can easily take a turn for the worse. Still, if done right, the field trip into the world of real estate can totally prove a bang for your buck. Keep on reading to find out about the qualities best investors possess and what rules they should follow.
Best real estate investing rules investors should follow
In most cases, real estate is an actual game of chance, just like gambling. Since the risks of losing are high, you must acquire the know-how before dealing with the matter. While you can certainly educate yourself through standard educational programs commonly found at universities, having a degree doesn't guarantee you'll make a good investor. It's more about exploring the industry yourself, being present, and following standards set by your colleague professionals.
Plan before you act
Making a plan before purchasing your first property is the smartest thing you can do. There is absolutely no way you can venture into any business whatsoever without mapping the road to success. And since real estate is, indeed, a business, the same rules apply to it.
Try asking yourself why precisely you are keen on investing in property and what your end goal is. Is commercial or residential real estate your cup of tea? Is it something you'd like to deal with long-term, or is it a one-time deal? Once you've determined your ultimate objective, you can begin the hunt for the right property.
If looking to buy your first piece of real estate in Saudi Arabia, for example, chances are you'll need to transfer some of the items to the place. Remember to put the appointment with the people at fourwinds-ksa.com in your plan, because you will need help with this task. Think of other steps you will have to take and note of them.
Halt investing in real estate until you have familiarized yourself with the market
Every good investor knows that no offers to be made before analyzing the desired market and its trends. Some factors to consider before buying property are:
- Current demographics of the region.
- Any changes in the unemployment rate.
- Any changes in the tax rate.
- The overall safety of the neighborhood and the current crime rate.
- Future construction plans implemented in the area.
These allow investors to foresee any potential changes in trends and better prepare for them if deciding upon purchasing an investment property. Opting not to go through with the deal also remains a reasonable choice if the market conditions aren't as advertised.
Search for real estate deals in places no one considers worth exploring
Most people think that looking for real estate to invest in is best done using multiple listing services. Doing this isn't particularly advisable as more people stumbling upon a listing equals more competition to cope with. Instead, think of searching for the property using non-standard ways.
Auctions, for example, could be the right choice. There are fewer people around to compete with, plus you could end up getting a nice piece of investment property for less money. Still, this isn't a perfect option for people with insufficient capital available straight away.
Viva-voce, or rather, word of mouth, could also be the solution behind smart real estate investing. Chances are your colleagues, acquaintances, or friends know someone looking to sell. Since most home-owners aren't aware of their property's actual value, you could score big with this one.
Some people prefer selling their houses on their own instead of with real estate agents' help. There is a vast number of ''for sale by owner'' listings for you to go through on the internet. Even though most of these are quite overpriced, finding the needle in the haystack, in this case, isn't impossible.
Last but not least, those poorly maintained properties that you drive by every day on your way to work are worth checking too. Try contacting the owners to ask whether they are interested in selling. Naturally, you'd have some renovating to do for it to gain value, but the whole situation could help you negotiate a lower price.
Bear in mind that the asking price is almost exclusively NOT the actual price
Some owners have a habit of overpricing their homes and can be hell-bent on not settling for less. On the other hand, others are not great at determining their property's real value. However, this is not true about real estate experts. They are familiar with every aspect of the property purchasing process and know the exact worth of all listings they have to offer.
While they could initially be asking for a price that's on the higher side, they are fully aware that closing the deal would require them to minimize it. Heck, in some cases, the end price could be as much as twice lower than the initial asking price! Don't doubt even for a second that, in the minds of real estate agents, somewhere, lies the lowest amount they are prepared to go with. Therefore, smart property purchasing is key to being a good negotiator.
Carefully analyze the numbers
While it can be profitable, unfortunately, acquiring property comes with some expenses. The tax needs care of, maintenance costs, utilities, and more. In addition to everything being costly, handling these also take out a massive chunk of your time. What's worse than spending months investing into something that's only bound to bring capital losses instead of constant cash flow?
To avoid this, do a rough calculation of all costs associated with real estate investing before purchasing. Compare the numbers you get with the value of the listing, and do a rough estimate of exactly how much profit owning it can bring you. Only after you've done so can you truly know whether purchasing the specific property would be the choice well-made.