Nowadays, almost one out of ten people you meet in your day-to-day encounters will tell you that they have invested or intend to invest in a real estate business. It’s no doubt that the real estate business is rapidly growing especially with the evolution and rapid transformation occasioned by modern technology.
So what is real estate? What comes to your mind when you hear the term “real estate”? Real estate simply refers to land as well as any physical property or improvements affixed to the land, including houses, buildings, landscaping fencing, etc.As an investor, you need to know where, why, and when to put your money in this lucrative business. Below are five important points that will guide you in making informative decisions in the real estate business, a combination of the best tips and advice.
Be financially composed. (maintain a clear distinction between your finances and the finance you intend to use in the project)
Having a distinctive idea of your current income, savings expenses, as well as unpaid loans, is an important step not only in the real estate business but in any business that you intend to undertake. It’s essential to get your house in order before engaging yourself in the purchase of more. This will help you in avoiding a problem on top of another. Take time to evaluate your payment plans on existing loans including their expiry period if any. Sit down and write down your real estate goals. Stay composed, have a clear idea of your budget, note down all that you wish to achieve in the real estate market before you visit the property. Consider the time limit in which your money will be tied to the proposed assets, including the risks involved. Take risks that you are comfortable with.
Think and research.
This is a vital point when it comes to real estate investment. Sitting down, thinking, and conducting proper research enriches you with adequate knowledge and subsequently exonerating you from making expensive mistakes. This is one of the major setbacks in real estate investment. Research indicates that 80% of losses in the real estate business are attributed to a lack of proper research.
“When the deal is too good, think twice “. Sometimes you find yourself stuck between a rock and a hard place. A mouthwatering deal comes your way and all of a sudden you start salivating. That’s a red flag. Sit, relax, research. it’s even surprising to understand that best deals especially in the real estate business are at times not shiny. They actually seem boring.
Explore the vicinity of your project to assess the economic viability of your assets.
Physical exploration, sightseeing, and engagement with the locals give you a perfect picture of what you expect from your investment. Engage other occupants, reputable realtors, who will, in turn, feed you with accurate information and the true picture, this information will be a vital tool in your plan including pricing and other costs as well as amenities.do not ever engage in a payment process in the real estate business without validating its availability, accessibility, vulnerability if any, as well as the profit margin.
Consider Tenant assessment and overheads/hidden costs.
Observe caution in your negotiations. Sometimes, prices of assets may sound lucrative, not aware of the hidden costs or overheads attached to them. Some of the hidden costs /overheads that are usually attached to prospective real estate investors without their knowledge are insurance, property tax property management, community fees which were never clear at the onset of transactions. Be observant of any clause before signing any agreement. consult your legal expert, just in case there’s a clause that’s not clear to you.do not understate or overrate a stable tenant, take time to consult on their creditworthiness and financial stability and if possible, the job security of the tenant. Just because a tenant managed to pay the initial installment in the most unexpected time doesn’t mean that he will maintain a steady flow of payment throughout his stay. Always be keen and proactive to respond to your tenant’s requests.
Proper accounting and documentation.
Upon purchasing an asset, a lot of people tend to relax, with an assumption that everything is fine, some switch off totally to another frequency, and only appear a couple of months to check how fat the account has grown. This is one of the dangerous and costly mistakes in the real estate business.
Maintain a clear ledger and all financial records, (proper bookkeeping habits) this will enable you to monitor the progress of your investment as well as ensuring that you are in a good position to handle any issue arising from this pointer as soon as it appears or sometimes even before it appears. Don’t forget or be ignorant in filing your tax returns (if possible involve the services of a PA to do it for you).