Deciding to invest in rental properties can be a great idea. However, you can’t get started in real estate investing before you learn a little bit more about it. Although rental properties can bring in very interesting returns, too many people still overlook them.
First of all, you want to get a return on your investment. Real estate is an illiquid asset that require you to take money out of your liquid assets. You need to strive to get a return rate that is the same as what it was on your liquid assets. This means that you should find a true cash flow property, and not a money pit.
You also need to be a manager and negotiator and have people skills. Practically, you must be able to do repairs, or have people on board who can do this for you. Finally, you need a property inspector. In most cases, a real estate investor becomes a landlord. This means that you must learn about being a landlord and how to find tenants that are desirable. To make it in real estate investing, you need money to spend so you an make more. Generally, only those that have at least some starter’s capital are able to make it in this world. Now that the practicalities are behind you, you can start looking into locations. There is all sorts to find out online, through local libraries and on town board meetings. You must learn about what the location is like and how it is likely to develop.
You can also decide to look into a real estate investment trust (REIT). This means you need less investing capital up front, but the returns are not as high either. REITs are popular because you are essentially investing in real estate corporations. Hence, you could invest in anything from an apartment block to a retail park. You can find the value of a REIT on the stock exchange and NASDAQ. Basically, they are like mutual funds but focus solely on real estate. Before you start, however, you need to think about a few things. Look into the economic conditions of the locations of the key holdings first. Also look into the performance history of the REIT. Also look into their future plans. Find out who the manager is and what they history is. Finally, what is the state of the current real estate market and how will the REIT respond to any changes in this market?