As discussed in a previous blog, Secrets of Success: How to Invest in Real Estate, there are many good reasons to invest in real estate. The first of which being the long term financial gain it can provide. It also allows you to have properties in a number of different locations, which protects your financial investment if one property takes a hit or is affected by natural disaster. If that happens, you have other properties to lighten the burden. If a debt needs to be paid for the failing property, you have other properties you could sell to cover it.
All in all, investing in multiple properties is a savvy financial move that can earn you incredible money and protect you in the case that one of those investments falls through. Though this sounds great, there are sure to be questions about how to actually do it. Well, here are some answers:
Look Below Market Value
What probably comes to mind when you hear “below market value” is falling apart and dilapidated properties, but this isn’t always the case. Like mentioned above, sometimes real estate investors sell properties because they need to pay debts or loans. This is a smart move on the investors part, and it really benefits you. Of course, you’ll need to do extensive research to make sure that is the case. Always visit buildings and inspect them thoroughly before investing to make sure that you aren’t buying a wreck. This approach will also quickly build your equity, meaning you can buy more properties sooner.
Research the Area
Research is key to smart investments. Research the property, research the market, research other properties similar to the one you’re considering. All of this will help you determine the potential gain from your investment. Also make sure that you’re asking the previous owner for all paperwork associated with the property. This could include income and expense statements, home repairs, and, if the property had previously been rented, service contracts and rent rolls. Basically, get your hands on anything that helps to determine the worth of the property. You’ll want to check that these records match historical records and determine if there are inconsistencies.
Research (Yes, More Research) Trends
Owning multiple properties can be great from a financial standpoint, but it does come with a fair amount of paperwork and necessity to understand the laws and regulations of real estate. Knowing the legal side is especially important if you’re investing in properties in different geographical areas. Different areas will have varying laws and regulations and to own a property means you’ll have to be aware and knowledgeable of them.
Investing in multiple properties is definitely a lot to take on. It requires an extensive amount of research, organization, and management skills. If you have invested in a property already and understand the amount of responsibility that comes with it, investing in multiple properties could prove to be a very satisfying and savvy financial decision.