So you’ve got a little extra money laying around, and you’ve been thinking about what to do with it. Naturally, you come to the conclusion that investing is a good idea. And yes, real estate can be a great investment opportunity. But this is a complex matter and one you shouldn’t take lightly. Just remember the number of times you’ve heard of a bad investment that has caused financial ruin! Yes, there are a lot of things to consider before you decide to invest in real estate. Don’t worry though, as always we’re here to help – and if you need moving services in Florida, you know who to call!
Advantages of real estate investments
Okay, now let’s take a look at some of the advantages that investing in real estate bears compared to, for example, investing in stocks:
Familiarity with real estate
Growing up as a kid, you’ve probably heard your parents talk about how important it is to own a home. If you haven’t grown up in a mansion, chances are that the idea to invest in real estate comes much more naturally to you than investing in stocks.
Real estate is, well, more real
One of the major advantages of real estate over stocks is precisely this – at the end of the day, you’re investing your money in something tangible. Unlike stocks, you can drive by your property. You can see it, you can touch it, it’s a very real thing. You can show your property to your buddies and say ‘I own this’. But most importantly, it makes scams much harder.
You’re safer with real estate
Speaking of which, this may be your most important advantage when you invest in real estate. Whether you’re looking for a Brooklyn apartment or the best places to buy a house in Florida, the principle’s the same. Simply, getting defrauded is much rarer and harder with real estate investments. Why is that? Well, as we said before – it’s something physical. You can actually go there, and inspect the property before you buy it. If you want, you can run background checks on the current tenants. Also, you can do repairs yourself if they’re needed. But most importantly, you can make sure the property you’re buying is actually there, and not a scam.
Real estate is really hands-on
Okay, so we’ve covered some ground on why investing in real estate might be a good idea. However, let’s not forget – this is also a major obligation. So think about that before you run off looking for real estate investment opportunities in Florida. If you imagine this as a scenario where you just buy some property and it takes care of itself, think again. Indeed, if you have a really demanding job that doesn’t leave much time for handling real estate, think twice before you invest. If you’re planning to manage the property by yourself, it won’t be easy. Expect phone calls in the middle of the night about gas leaks or exploding sewage. And yes, you can hire a property manager to take care of this stuff. But bear in mind, that still entails constant oversight, and also additional costs.
Calculate the costs before you invest in real estate
Speaking of additional costs, let’s talk about your budget. This is the most important thing to consider before you decide to invest in real estate. First of all, do you have the cash to buy the property in the first place? It’s a really simple question. And don’t just assume you’ll be able to collect this money from renters. Really, you should definitely consider if you have the money for at least the mortgage payments. You might not have thought about this, but renter turnover isn’t exactly low. You never know when your tenants will be calling up residential movers and moving out.
If you’re not careful, you may find yourself in a situation where you’re behind on your mortgage because you’re not collecting rent. So, that’s why we recommend you only invest if you can handle it. And don’t forget, if you’re late with mortgage payments, this can damage your credit rating and cost you even more money in the long run. Basically, if you can’t afford to own your property without renting it, it may prove to be more of a financial cost than a gain. So take a long hard look at your current finances before making an investment decision.
Do your homework on the property
One of the things you should know before you invest in real estate – research is key. Before you invest a single dime in a property, you want to do the most complete and thorough research you can. Search the property records – there might be a lien on the property, and you want to avoid making a bad investment. Also, you may be planning on selling this property later. If so, consider whether something will affect its value positively or negatively. For example, if there are plans to build a road near your property, this will increase its value.
Lastly, here’s some advice we simply can’t overstate enough – make sure to start small when you invest in real estate. Seeing as this is probably your first property, you really want to ease into it as gently as you can. As you’ve probably realized, the role of a landlord isn’t easy, so you don’t want to manage a huge apartment building right away. That’s why you start small, and once you’re feeling comfortable, you can expand. As you gain experience and acquire funds, you’ll be able to buy larger properties and manage them more easily.
We hope we’ve helped you learn some of the basics of real estate investment. As you can see, choosing to invest in real estate isn’t a small decision to make. That’s why you want to know all the fundamentals and make an informed choice!