Basic Things to Learn When Investing in Real Estate
Unlike stock investment, real estate investing is a bit complicated due to a number of things needed along the way. Investment in real estate involves sophisticated requirements especially on the legal and financial side. Before you dip your toes for this type of investment, make sure to get a proper education about property investment first.
There are many great books that can help you get educated in this sophisticated subject. At this list of 26 best books on real estate investing recently released by Real Estate Bees, you will find some of the top rated books on this subject.
Besides having some or all of the books from the list above, based on the experience of professional real estate investors, here are the most relevant tips you need to know:
Always bear in mind that the property location will matter a lot. By saying that location matters a lot, it is not an understatement. In fact, this old adage in real estate business is the most accurate of all the tips that will be shared here. As an investor, you will be acquiring properties so that you can capitalize on them later on. However, you do not want to choose properties situated in bad locations.
According to the professionals, the best way to do it is to look for worst houses in the best streets of a certain local area. This is a good investment because potential customers will see the transformation of the house. In short, the house suddenly became a hot item. This kind of strategy is called fixing-flipping.
Wholesale properties are also the best options in the market. If you are good in stocks investment, you can apply the same principles in this type of market. The best principle to follow for this type of investment is the one promoted by Warren Buffet wherein the investor acquires more when other investors are becoming fearful of the market. In short, you are investing on properties that are beaten down and turn them around when the market condition goes okay later on.
As much as you can, go for properties that are wholesale so that you can avail discounts. It does not hurt if you run the numbers ahead of time so that you’ll know how much to shell out for the rehabilitation of the house and how much to earn when you are about to sell the property.
Investing in properties means you also need to check your tax benefits. The main reason why government wants private investors to offer housing is to be able to stay away from the responsibility of providing houses to the citizens directly. This is why as an investor in this type of business you are also getting tax benefits. According to professionals, the best existing benefit out there is the depreciation write off. To be able to understand this technicality, there is the need for you to consult your tax advisor. Yes, tax advisor’s help will be needed especially when you are dealing with properties as they know legalities better than you do.
Whether you like it or not, real estate property investment is still a form of investment. Without considering things, you are gambling your cash. The last thing you want is pouring your cash to a certain residential property and having difficulty dispatching the house because there are no interested buyers. With proper guidance, you can be able to get it right.