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Investing in Real Estate Basics

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I am an aspiring real estate investor. I don’t have direct experience investing in real estate, but several of my closest friends and family members own at least one rental property. I don’t just want to follow the crowd, because most people don’t think highly of investing in real estate. While I don’t have the experience, I am starting to learn the basics of investing in real estate. For those who are wondering how to get started, here are some basic steps.

1. Survey the Market: Understanding how much properties sell for in your area is essential to smart investing. You don’t want to look at houses without any understanding of the going rate.

2. Get Pre-Approved: If you don’t have the money sitting around, get pre-approved for a loan before shopping. This will speed up the process of bidding on a property and will also give you a metric to gauge how big of a house to buy. The difference between getting a good deal and missing out on a steal could be having to wait a couple days for approval.

3. Put Up For Rent Signs: Finding new tenants can be difficult depending on the market. This is why it is important to put up for rent signs immediately. The more you delay, the longer you will have to wait to get rid of that vacancy.

4. Protect Yourself: While you ultimately want to be insured immediately after buying, it’s important to have landlord insurance to protect yourself. The last thing you want to happen is to be unprotected and face a lawsuit. This could not only ruin your return on your investment, but cause you to lose your property.

5. Slowly Raise Rent, Enjoy Return: Last, but certainly not least, the last important step in investing in real estate is slowly earning more from increasing rent. Slowly increasing rent is one of the ways that long-term investors make a huge profit. As they owe less money on the mortgage, they make more and more with increasing rent.

If you are thinking of investing in real estate, it’s important to do all of your homework before hand and make sure that your investment is sound. It’s just like any other investment. You wouldn’t do it without being certain.

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Posted by CJ   @   20 July 2012 1 comments


Aug 3, 2012
9:16 am
#1 Lucas :

Raising rent when rent is already too high is no way to ethically make money. Too many landlords treat their tenants as open wallets and convince themselves that their outrageous rent is fair because tenants sign the rental agreement, all the while forgetting that tenants have to put a roof over their heads. You can tell the rent for a typical 2bedroom is too much if it exceeds 25% of a typical tenant’s salary (which generally ranges from minimum wage to $15/hr).

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