When people look to invest their money, one of the most common choices is real estate. Having the idea is simple, but the execution is a bit more difficult. There is no set rulebook to help you through this new investment venture, but we’re here to help you navigate the process. These five tips will help you make a sound property investment.
Treat your business like a business!
When you get started, it may seem easy to stay organized on what payments are going where. But as you diversify your portfolio, you will incur more tasks and possible issues than you can track in your head. The best way to start your investment venture is to set up specific protocols. Start receipting every payment you receive and file it accordingly. Develop spreadsheets of what you are taking care of, and what issues have occurred. The stronger your foundation, the longer you can go about diversifying your real estate portfolio.
You did not come into the world knowing how to read or write. Similarly, you will not enter this investing venture knowing all of the rules and possible pitfalls. Gather information for a good three to six months before you delve into heavily investing. Good resources range from investing in real estate books to friends who have also invested in real estate and have more experience. Try to learn everything you can beforehand.
Calculate Expenses Realistically
Purchasing the property will not be the only expense you encounter. Unexpected expenses will occur and as such should be included in your budget. If you do not account for all of the possible costs you might incur, problems can arise, both for you and for the property itself. Before investing, determine all expenses associated with your rental property to ensure no surprises.
Estimate an ROI
While you’re calculating your expenses, estimate your return on investment, too! This is just as important as understanding your costs. Simply raising the rent or cutting back on certain services such as lawn care won’t always positively impact your return on investment. The bigger the ROI, the better off your investment is. Spend some time playing with the numbers and figuring out backup plans for when an unexpected expense occurs and impacts your long-term plans
Consider Enlisting a Property Manager
Can you do it yourself? Certainly, with enough time and few enough properties to look after, you are more than capable of managing your own properties. But the goal is to expand and diversify your investment portfolio, which would mean you might need to turn to a property manager. This investment venture is not a solo affair, and you don’t have to face it alone. Property managers are here to help and lead you to the best results for you.
Looking for a property manager to help guide you in your current or future ventures? Give TALK Property Management a call, and together we’ll work toward a better future.