Like most everything in life reward only comes with diligence,discipline,and a plan. Increasingly your wealth through real estate investment is no different. Despite real estate being considered to be among the safest investments you can make there can be a lot of things to intimidate one to think successful investing is impossible.
Here are a few things to keep in mind for those just getting started:
Working with Sellers: Honesty is the best policy.
If you see potential in a property you are listing, don’t be afraid to gush over it a little bit; encourage your seller to raise their price accordingly. Even if the market is down in your area you can be a part of bringing it back – and it’s always better to negotiate down than to be caught low. Be particular to detail, especially those that are only your personal taste, but don’t try to oversell something that’s less than shiny.
Pick the Right Property
Even in a 50/50 neighborhood there will without a doubt be at least a few homes that are a cut above, or even one that is the “gem” of the subdivision. Maybe it’s got a immaculate corner yard, or backyard oasis, but for whatever reason it stands out. THAT is your home. It will be easier to sell, and likely bring higher return…right?
Well. Yes and no. Sad fact is a diamond in the rough is still IN the rough; surroundings can have a big effect on the value of a home. Even the most modest home in a higher grade community will be worth more and appreciate more than the most palatial residence if it’s located in a slum. It’s important to know if you’re in it for a longer turn return or just a quick turn around. Remember: location, location, location is still important important important!
Price Isn’t Everything
Interest rates are the other thing. It’s a little detail in some respects but young investors often forget that a real estate transaction isn’t like other everyday purchases. When you buy real estate you are not simply trading a flat sum for a product you are essentially paying a reverse annuity to the seller for the property (or vice versa). It’s never a bad idea to shop around a bit for the best interest rate before you take on any property as being the “perfect” one.
…No Really, the Price ISN’T Everything.
Now you thought we just said that but the other thing you need to remember is that the cost alone isn’t what the property will cost you. A $100,000 listing may seem like a steal until you remember the transaction fees, mortgage cost, insurance cost, and oh yeah….taxes. That sweet quick $100k turnaround just sent you for a $190,000 loop.
Seems like common sense: Never leave money on the table. Likewise don’t spend money you don’t have or don’t need to spend. One way you can handle both sides of that are by never putting down any less than 20%. Doing so may require you to take out more mortgage insurance; that alone could slowly eat away at your dividends.
Buying real estate as an investment entails a lot more than just your normal transaction. It’s more than a simple transfer of property; to insure your success you need to be aware that you’re buying (or selling) much more than just four walls and a roof. There are costs beyond the sticker price of the house, no matter how long or short it is in your hands.
Yes, a house is a home. But you’re missing out if you see it as nothing but. Real estate is a financial instrument that, under the right conditions, can help you generate lasting wealth.
Bank Owned Homes in Boise as well as Boise HUD Owned Real Estate are great picks for investors looking to cut their teeth. The Blake Mayes Team can help you find the best properties to get started, or help you refine your investment strategies for better returns. Contact us today to find out how we can help!