Real estate investing includes several different ways you can earn a profit, if you know the differences and are prepared to take advantage. You could, for example, flip a property by buying it, fixing it up quickly and immediately selling the more valuable property for profit. You can buy foreclosures, which are auctioned off, and potentially get a steal of a price on a great property. There’s abandoned property you can research to find out who the last owner was and if it’s possible to assume that role. You can also invest in mutual funds and other avenues, and make money with the real estate market without ever purchasing a physical piece of property. As you can see, there are plenty of options, but keep these principles in mind regardless of the route you choose.
Always Manage Your Exposure When Real Estate Investing
Making money with real estate comes down to properly researching all of the factors involved. Diversification is always a good strategy if you can afford it. That means you lower your overall risk by investing in multiple options, so that if any lose money, you don’t suffer greatly. You can also mange your risk and exposure by researching all of the laws and processes involved.
You also need to find available properties, learn how to obtain them, figure out how much it would cost and what you can afford and what your strategy is, quick profit or long range value?
Always remember to:
1. Learn the local economy. Of course the economy is important, but within the overall picture, local outlooks can change greatly. Different areas can have weak or strong job markets, skyrocketing or plummeting real estate value and so on. So learn the local area you plan on investing int.
2. Get the best financing. That means considering different factors such as fixed rate mortgages, adjustable rate mortgages (ARMs), different loan lengths and terms and so on. Adjustable rate mortgages can seem attractive with low starting rates, however those rates can jump enormously depending on the market itself. Fixed rate mortgages may start higher but you will have stability. You need to consider what the best option is for you and your needs.
3. Pay as high a down payment as possible. Paying a high down payment does a couple of things. It takes money off the loan amount, meaning you can pay it off quicker and have to pay less interest. It also means that there’s less risk for a bank, and so the interest you get should be lower to begin with.
4. Get creative. That means making higher monthly payments than necessary, so you pay it off quicker than you need to and owe less interest. Smart and creative thinking like that can save you big money over the long term.