Having a well-rounded portfolio is important if you want your investments to pay off in the long-term, which is why a lot of investors consider buying property. If you’re new to investing, and asking yourself how to invest in real estate, look through our cash for houses Dallas team’s best real estate investment tips to help you start off on the right foot!
#1 – Decide how you’ll make money
Real estate is a much more flexible investment than many people realize, and there are several ways that you can make money off your property. Deciding which of these matters most to you will help you decide what type of property to buy:
- Appreciation – Here, you are forecasting that the property you buy now will be worth more later when you sell it. This generally occurs in areas with good infrastructure, that are in good or improving neighborhoods, or where you can remodel them well to sell at a similar or better price than your neighbors.
- Income – In this model, you are purchasing a house to rent it out, thereby earning income each month off the property and earning additional profit when it comes time to sell.
#2 – Decide your budget
Look at the budget you can afford to help narrow down what type of property you can buy, where you can buy, and other key factors. If you are taking out financing, remember to calculate this against the rental income you may earn as well as whether you will make a profit off selling the home, as the appreciation of the property must be set off against the interest that lenders charge. Be careful about leveraging your current property against the next one or taking on too much debt. Property investing is a balancing act, and those people who are most successful at it stay within a comfortable budget for their income and make plans for a safety net.
#2 – Be practical
Remember to choose a property with your head, not your heart – especially if you are not planning to live in it yourself. Ideally, the property should have good scope for remodeling (providing that is in your budget) and be in a higher-demand area if you want to flip it quickly. It should be in a high demand rental area if you want a secure rental income, and it needs to be an appropriate for the market. For example, there’s no point buying a single bed apartment in a high demand area for families – although it may be a great buy, renters and buyers in the area will want space for their families, so you may struggle.
#3 – Stick to your remodeling essentials – and budget
Again, keep your investment goals front of mind, and don’t overdo any remodeling the property needs. If it is going to be a rental, keep things good quality and basic, and rather cover essentials like a good water heating system and external structural maintenance rather than putting in a fancy kitchen or 5-star spa bathroom. The return on more aesthetic projects is quite low because not everyone has the same taste. That means you should aim to appeal to the broadest possible market.
#4 – Consider a fixer-upper
Fixer-uppers often carry huge potential for real estate investors, since many people want a move-in ready property and don’t have the time, resources, or vision for a home redesign. If you have some creativity, time, and skilled contractors you can transform a bargain bin home into something very desirable. Keep in mind what the market is looking for, what similar homes in the area are selling for, and who your ultimate target market is.
#5 – Know the costs involved
Buying a property is a more complex investment because of the different costs that can be involved in the process. This includes basic maintenance and upkeep, insurance, and utilities, as well as financing costs, property taxes, capital gains taxes, and more. However, it can be incredibly rewarding if you take the time to budget for all the costs and invest wisely. In a strong market, whether for rental or to sell on, homes and apartments can become a useful flow of additional income for new investors.
Looking for a Great Investment Property? Our Cash for Homes Dallas Agency Can Help!
Here’s the last of our real estate investment tips! Shiny Key Properties is a family-owned, highly regarded cash for houses Dallas agency, and a great resource for anyone wanting to invest in real estate. We buy houses directly from sellers, including tear-downs and homes in need of repairs, ensuring that you have a great portfolio of real estate investment properties to select from. Rather than dealing with private sellers and real estate agents, you chat directly with our team of property investment specialists, helping you buy a fixer-upper or a dream home simply, affordably, and quickly!
Chat to us today if you are looking to make a property investment in Dallas or need more information on our real estate investment tips.