5 BASIC THINGS EVERY REAL ESTATE INVESTOR SHOULD KNOW
TIPS FOR SUCCESSFUL REAL ESTATE INVESTING
To be a good real estate investor, you have to be willing to do your research. If you are new to the game, you’ll want to pay close attention to the information below. In it, we’ll share with you several things every real estate investor should know to stay ahead of the trends and the competition.
1. LOCAL PRICING
As an investor, one of the first things you should look at is the current pricing trends in the area. For example, are prices accelerating more in one area than in another? How does the average home price compare in neighboring towns? Knowing the answers to these questions will help you know which area housing is in highest demand. Studying these trends will help you figure out fair pricing on different types of properties so you get the best deal possible.
Seek out real estate agents for local pricing trends, as they have access to the MLS. The internet, newspapers, and town halls are all good sources for pricing information as well.
2. MORTGAGE PRE-APPROVAL
Real estate investor pros know that getting pre-approved for a mortgage carries serious benefits. First and foremost, the lender locks in an interest rate for you that stays the same regardless of interest rates at the time you actually purchase a home. Secondly, buyers hold you in a higher regard than other prospective buyers who have not sought pre-approval.
3. DEVELOPING COMMUNITIES
One way to ensure your success as a real estate investor is to buy properties in up-and-coming neighborhoods. Growing communities experiencing new infrastructures make for great investment opportunities.
Look for things like new developments such as schools, shopping malls, and roads, as these things suggest the area will be experiencing a growth spurt soon. Check with town halls and road or building departments for word of future projects slated to start in the near future.
4. LOW-TAX AREAS
Comparing property taxes from different areas can help you decide which areas will be in high demand. If taxes are higher or are slated to rise in a given area, but a neighboring community has lower taxes, more people will want to buy in the lower tax community.
Check with real estate agents in the area or speak with a local tax assessor to determine property taxes in a given area and whether an assessment is scheduled that might raise taxes.
5. SCHOOL RANKINGS
Communities with high ranking schools tend to draw parents hoping to enroll their children in quality education. Good investors know that buying in such areas can lead to high profits.
The easiest way to find this information is to contact the board of education in a given area. If you have time, visiting the schools themselves is an option since schools with high rankings gladly share the information.
To be a successful real estate investor, you must be willing to do your homework. Tapping into local resources for the information you seek is the best way to stay a step ahead of the competition.
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TIPS ON HOW YOU CAN INVEST IN AN APARTMENT BUILDING WISELY
THINGS TO CONSIDER FOR WISE APARTMENT BUILDING INVESTING
No one really knows beforehand if an investment is going to lead to big profits. Having said that, you can do your part to make sure it is by keeping the following five things in mind as you search for the right apartment building to invest in.
Obviously, the most important factor is whether the property will bring in a profit. After all the expenses are paid, how much income will the property generate compared to other apartment buildings on the market? Lastly, consider when you need to generate an income – now or in the future. What kind of potential does the property have for generating a positive income into the future?
How much money can you comfortably afford to put down on a property? The less money you need for a down payment, the more money you can spend buying more than one property. The game of little-to-no-down payment is a tricky one, however. Obviously, if a property appreciates in value, so does your return on investment. However, should the property lose value and you have a lot invested in it, you could end up with a negative cash flow.
How much equity does the property have in it, or is there potential for creating equity in the property? Buying into equity is the best option, but if you can get into a “fixer-upper” that will be worth more once all the repairs are done, thus creating equity, you’re in good shape.
If the property you’re considering is located in a good neighborhood and it’s the right time in the real estate cycle to buy, your chances of appreciation are pretty good. The real estate cycle is somewhat speculative and difficult to gauge, and buying for short-term appreciation is risky, but a long-term investment intent on appreciation will increase your odds for profit exponentially.
Risk is a part of every investment, but you have to ask yourself if you’ll be able to overcome the odds if you’ve assumed incorrectly with your investment.
Will you be able to handle a couple of vacancies now and again? What if the property fails to appreciate or the interest rate adjusts, and your mortgage rates increase? These are all considerations you need to think about. Always plan for the worst while expecting the best.
When it comes to investing in an apartment building, there are a lot of things to think about. From ensuring a positive cash flow to assuming the risks involved with such an undertaking, it’s important to plan ahead and cover all bases to protect your interest. You can make good investment decisions by keeping the above tips in mind, as they will help you invest wisely in your next apartment building.