Investing in real estate can be a great way to build wealth and generate passive income. However, if you’re a budding real estate investor, you might be overwhelmed by the amount of information on how to get started.
While the path to becoming a successful real estate investor does come with its own set of bumps, there are steps you can take to ensure your best chances for success. With that in mind, we reached out to experts from Austin, TX, to Fairfax, VA, for their best real estate investing tips to help guide you on your investment journey.
1. Don’t quit your day job just yet
Real estate investing is more complex than HGTV makes it look. Surround yourself with seasoned professionals who can help you make the right decisions to protect your investment returns. Keep your day job; it’s easier to get financing while working. Buy smart; you make money when you purchase real estate, not when you sell it. –America’s Mortgage Resource
2. Seek out professional advice to help guide your decisions
Don’t rely on others to tell you what a good investment is. You will need help along the way from lenders, agents, contractors, and many more people, but you are the one who decides what the right or wrong property for you is. Don’t let others who may not know about investing guide you down the wrong path with the wrong real estate investing tips. –Invest Four More
3. Keep your mortgage lender in the loop
Discuss the different downpayment percentages with your mortgage lender and how that impacts your interest rate. Often you can obtain lower rates for putting more money down. Using this real estate investing tip may drastically alter your monthly cash outlay on properties you acquire for investment purposes, making them more feasible. –Barton Creek Lending Group
4. Consider the monthly rent that you can charge
When looking at potential properties to purchase for an investment, the most important factor is to consider the monthly rent that can be charged and start from there. If monthly cash flow is important, you can work with your lender to develop how much you will need to put down to get to your monthly break-even point. Keep in mind that you can also usually write off your expenses associated with the property on Schedule E (Form 1040 or 1040-SR) of your tax returns where rental income is recorded. These expenses can include advertising, auto and travel, cleaning and maintenance, commissions, insurance, mortgage interest, repairs, taxes, utilities, depreciation, and “other” expenses, such as HOA or condo dues. Although you might not have a positive monthly cash flow with just the collected rent, it’s possible that after the expenses are applied come tax time, you could break even or be cash flow positive.* –Intercoastal Mortgage Company
5. Know how to add value to your asset
Learn from others who have in-depth knowledge in the particular area you wish to invest in and avoid paying a hefty fee in the “dump tax,” from which many investors never recover. Remember, success is built brick-by-brick, not in one big leap. –Investment Realty Co.
6. Minimize the risks
Good property investment is about minimizing the risks. Ensuring we help reduce any potential vacancy and ongoing maintenance are the two major factors to watch when looking at buying investments. Buying well-located properties in great condition that have either been rehabbed or updated should minimize either of these two risks. This, coupled with great on-the-ground property management, makes for a wise investment that should give you a healthy return and see some growth in the years to come. –Global Investments Incorporated
7. Have an end goal in mind
A tried and true real estate investing tip to keep in mind is to build a solid foundation by envisioning what you want your end goals to look like. Work backwards on where you want to be, immerse yourself, and find strategies outside of your current competition box. Not everything has to be uniform to how others are operating – work to find your niche, systematize it, scale it, and shoot for the moon. –KC Property Group
*Redfin does not provide legal, financial, or tax advice. This article is for informational purposes only, and is not a substitute for professional advice from a licensed attorney, financial advisor, or tax professional.
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