If you hope to diversify your investment portfolio or earn a passive income, you may have considered investing in real estate. Rental properties can be wonderful investments, but if you are a first-time investor, these are a few tips you may want to consider.
Build a Team
After you have set your goals and done some research, such as buying an investment property Redlands CA, you need to build a team. First, you should seek at least one mentor who is a successful real estate investor. Then, you should add realtors, mortgage brokers, a tax accountant and a real estate lawyer to your team. You may also include a few contractors with reasonable rates. Your team will not only help you find great properties, but they will also guide you through the process and be there for you when you run into a challenge.
Research Different Markets
You may see other investors making a lot of money on specific neighborhoods and think you should follow their lead, but this isn’t always the best tactic. Instead, you need to do some research on potential neighborhoods, cities and towns to determine the demographics of the area. For example, check the crime rate, school reputations, amenities, medical care access, public transportation availability, etc. You should also check the demographics of the individuals in the neighborhood, such as mean income and housing composition, e.g., how many, their relationships, etc. You don’t want to purchase a large single-family home for rent in an area that is mostly comprised of single individuals.
You should also search for locations where homes are being refurbished. Look at housing demand in the neighborhood. Any time you can beat the crowd into emerging neighborhoods, you can significantly increase your income. However, avoid over-rehabbing your properties.
Don’t just invest in the same neighborhood. Instead, as you expand your investments, consider investing in multiple neighborhoods, cities and states. However, you should have a property management strategy before moving outside your current area.
Real estate typically increases in value over time, so it tends to be a great investment. However, do your homework and build a great team to ensure your success.