Real estate investment has made several millionaires and many of the investors perished with huge losses. It’s an unpredictable world that can reward you overnight and take thousands or millions of dollars from your pocket. Luckily, all of this is not based on chance. Strategic planning and enough research can help you take the right steps towards a successful journey of real estate investment.
If you are planning to step into this world, it’s imperative to know its ins and outs. The first concrete step you are going to take is to buy an investment property. This may appear to be as simple as searching for investment property for sale in Lake Oswego OR and checking the listings but it isn’t.
Although professional help can make things a lot easier for you but if you truly want to ace this game, equip yourself with enough knowledge before making this move. Here are 8 things you must know to start with.
Be Clear On Your Purpose And Horizon
Owing to the high-value investment in real estate and its liquidity, you cannot afford to make any mistakes. A lack of clarity in purpose can land you in serious financial distress especially when you are financing your property on loans. You may be dealing with consequences for many years down the road. Determine whether you are investing to buy or rent, buy or sell in short or focused on the increase in the intrinsic value of the property for the years to come.
Location Matters The Most
Location reigns supreme when it comes to real estate investment. Some of the most important factors you need to consider are proximity to amenities, scenic views, and the status of the neighborhood. Residential property valuation should be conducted before you invest your money in a property for buying and renting.
When it comes to commercial investment property, closeness to transport hubs, freeways, warehouses, closeness to markets and tax-exempt areas must be considered.
Choose Between Buying And Financing Your Property
These are the two main options, either you buy a property for cash or finance it through a mortgage. If you have got some cash, it’s best to stick with the first option. When you are ready to pay upfront cash you may get better deals in a shorter time.
If you plan to take loans from mortgage lenders or banks, you have to check your credit score and shop around for lower interest rates. When you are sure about a steady supply of income for the coming years and are investing for your retirement plan, financing is the better option.
Secure Yourself With Landlord Insurance
Being a landlord comes with its fair share of risk. Secure yourself with landlord insurance. When you are making your first investments it’s normal to be skeptical. Landlord insurance in addition to the homeowner’s insurance will provide you the ultimate protection you need at this stage.
It generally covers liability protection, lost rental income, and property damage. If there are any injuries due to property maintenance issues, you will not be held responsible for liabilities.
Don’t Invest In A Property That Needs Major Repairs
It’s your first investment property any deal that hits below the mark is lucrative. A lot of homeowners make the mistake of buying a property that needs major repairs at a very low cost. Flipping such houses into rental property takes a lot of money and hard work. Unless you are very good at handling big renovation projects, don’t invest in such a property. Find a property that can be fixed with minor repairs.
Factor In The Operating Expenses
One of the biggest temptations of real estate investment is to calculate the rent money you would get at the end of each month but don’t forget to factor in the operating expenses. These are the ongoing costs to maintain a rental property in service. They can anywhere between 35% and 80% of your gross operating income. It can vary greatly from month to month. Stick to the 50% rule to have realistic expectations. Let’s say you charge 1000$ rent, the operating costs are nearly 500$ for every month of the year.
Get To Know Your Legal Obligations And Rights
There are pros and cons to becoming a landlord. It comes with a lot of duties and responsibilities other than the profits. Unless you have a great staff to help you will all of it, you must know the legal obligations and rights of a landlord. Get in touch with the latest regulations to avoid any unpleasant surprises.
Taking baby steps in the real estate world can be the smartest thing you can do. Don’t make huge investments at the beginning. Start slow and gradually take bigger risks. You have to calculate the risks and rewards beforehand but you don’t have to do it alone.
Hire Licensed Realtors In Lake Oswego OR
Search for the most reliable, qualified, and licensed realtors operating in Lake Oswego OR. Leave no stone unturned to learn about the professional competence of the realtor. Get references and meet with different people before choosing a person to work with.