5 Basic Tips for Investing in Real Estate

One of the most exciting aspects of investing in real estate is your ability to invest your money today and make it work harder for you, resulting in an even bigger pot of money in the future.

However, those new to real estate investment can be forgiven for feeling somewhat intimidated by the property landscape, with all its rules and regulations. As with any type of investment, it’s essential that you arm yourself with enough information before diving in.

Real estate investing

With that in mind, make sure you take on board these five easy tips to help you make that first real estate investment without any unwanted surprises:

1. Make sure it’s something you’re passionate about

There’s no doubt that you don’t need to be an expert in real estate investment; nor do you need to be a dab hand at DIY, the real secret to successful real estate investment is being passionate about what you’re doing. No-one knows it all, but if you have a positive can-do attitude you will almost certainly achieve your goals.

If you really are concerned about your lack of knowledge, consider a partnership with someone who does know what they’re doing to use as a soundboard for your investment ideas.

2. Consider settling personal debts before investing

Those with pockets far deeper than yours may be comfortable carrying debt as part of their real estate portfolio, but when you’re first starting out it’s highly recommended that you settle as many personal debts before you take on your first buy-to-let mortgage. In some cases, mortgage lenders may view your personal debts dimly and refuse to lend you the money to buy your chosen investment, so get yourself in the best possible financial shape first.

3. Think interest rates first and interest rates last

On the subject of mortgages, interest rates must be one of the first and last things you think about when it comes to investing in property. You need to be able to take a long-term view. Admittedly, it’s never been cheaper to borrow money at present, but you need to prepare for the eventuality that interest rates will rise. Make sure you get a mortgage that is low enough that it does not eat into your monthly profits, particularly if you’re renting out something particularly lucrative such as a room for rent in Abu Dhabi.

Real estate investing

4. Treat real estate as a business

From the moment you make that first adrenaline-fuelled real estate investment, you must treat your property portfolio as a business. Develop a rock-solid workflow system so that everything is kept on top of, from bookkeeping and rental income to property maintenance and taxation. Investors from all over the world are buying up multifamily real estate in Mexico currently, so it’s critical to keep an eye on where the hottest markets are. Consider meeting with a qualified chartered accountant who will also be able to suggest the most efficient way of maintaining your finances.

5. Don’t expect to get rich quickly

Real estate investment done well can yield fantastic returns, of that there is no doubt. Nevertheless, it should never be viewed as a ‘get rich quick’ strategy.

Sometimes these investment returns don’t transpire for many years, sometimes decades, so don’t go quitting the day job until you have enough capital behind you to keep yourself self-sufficient and reinvest in additional real estate opportunities. If you’re fed up juggling your full-time job alongside your property portfolio, why not drop down to a manageable part-time role, doing something that gives you genuine pleasure while your property investments mature.

In summary, the main takeaways for anyone new to real estate investment are to maintain a level-headed and realistic outlook on profits and don’t dive in to your first investment just because you have itchy feet – go through the necessary due diligence to ensure every penny you invest is a shrewd move.