If you’ve turned on
television lately, at some point you'll hear experts praising virtues of diversification. Real estate has long been considered a conservative, long-term strategy to growing wealth. While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.Learn all you can. Consider attending a seminar or talking with individuals who are experienced in real estate investing. Look for people in your area or search for investor information on your favorite search engine.
Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment's notice. It could take days or months to sell a property, depending on strength of your local market conditions.
Consider your financial goals. It is possible to make a lot of money. However, you need to determine how hard you are going to work to do it, and how long you intend to keep each property. With each investment unit, you'll need to take into account cash flow, appreciation, equity, and depreciation. Talk with your accountant about tax liabilities and benefits.
Consider cash flow. You'll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants, repairs, property management, taxes, mortgage, etc.
Start small. Look into buying a single family home or a duplex. Leave large apartment buildings and commercial properties to professionals.
Inquire at your local Chamber of Commerce about companies relocating into or out of area. Company movement is one indicator of demand for rental and/or office space.
Find a property that will be in demand when you are ready to resell. Look for a moderately priced home on a quiet street with three or four bedrooms, two bathrooms, and a garage.
