I know when you want to enter the real estate business, it can be a very daunting task. There is so much to consider and as a newbie in the industry, you just don’t know where to start. I know this because a few years ago I was in the same boat as you.
After reading a lot of books and blogs and doing my research about real estate investing I was able to enter the real estate business and grow my investment portfolio. I just love real estate and I love helping people learn about the game. That is why I have decided to give you my 5 real estate investing tips for beginners.
1. Do your research thoroughly
The first thing you have to do before you even think of buying your first property is to do you homework. Now I know a lot of you hate homework, including me, but if you make a mistake in property, it could end up costing you a lot of money.
You might ask, what does this homework entail? Well, the first thing you’ve got to do is, check your finance and affordability. What is the maximum you can afford to spend on a house? It doesn’t help going to a random open house, without even knowing if you can afford the property or not.
It is very important to understand the area in which you are thinking of buying. Do research about two or three areas in which you are interested and then decide on one. Remember, if you are going to lease the property, you must think about whether or not it will be easy to get a tenant to lease from you. If the area is not up to standards, it might be difficult to get a tenant or you won’t be able to ask too much rent.
If you are planning to “flip” the property, it is also very important to check the resale value. You can do this by looking at what the neighboring properties in the same area sell for. When flipping a property, it is also very important to buy below market value.
2. Check Structural integrity
If you’ve read my previous post, 5 things to consider when buying rental property, you know that this is a very important point. If you don’t consider this tip to be very important, it could end up costing you quite a bit of money.
Some of the things to look out for is cracks in walls, ceilings that have any watermarks or patches of paint. All of these are warning signs that the property’s got some work to do and we all know that this is a keyword for money. The more work you have to do, the more you will end up paying for the property.
3. Never accept the first bond offer
When your applying for your first bond, I know it can we a very stressful. So what happens is, as soon as you get an offer from the bank, you want to accept it. This is a big mistake that most newcomers make.
The thing is, the banks are also looking for clients and opportunities to make more money, so they will negotiate to get clients. When you receive a bond offer from a bank, use this to your advantage. Take this to all the major banks and ask them to cover more of your total cost (if you don’t have 100% bond approval). You should also negotiate better interest rates.
You might think that interest rates are not a big deal, but if you do the math, you will see that high-interest rates will end up costing you more money than you think. That is why it is so important to get your interest rate as low as possible.
4. Look before you buy
This tip goes together with tip 1.
I’ve read somewhere you should actually view 100 properties before you decide to buy one. You might think this is crazy. To be honest, I also think 100 viewings is a bit crazy, but I agree that you should look at quite a few properties before you decide to buy.
Why is this? The thing is, you should become experienced in property viewings. Know what to ask, know what to look out for and know when it is not worth it. By going for more viewings you will start getting confident and with confidence comes power. I must say, I have learned a lot of what I know by going to viewings and speaking to real estate agents.
5. Don’t be afraid
This is probably the most important tip of them all. All these tips mean nothing if you don’t take the leap.
After you’ve done all the necessary homework and research and you’ve found the property you want to buy, you have to trust your judgment and go for it. Most of the time people are too afraid to take the risk, so all the time and effort goes to waste.
If you buy a property always make sure you have an exit strategy. This way, if something goes wrong, you can get out of it as soon as possible.
These 5 real estate investing tips for beginners are probably 5 of the most important steps I follow when buying/investing in property. These tips are not only applicable to beginners but to anyone who is investing in property. Like I said, I still follow these steps today.
I truly hope that these tips will be helpful to you and if so, don’t be shy to share!