Investing in real estate may be one of those accomplishments on your bucket list you felt that you may never achieve. The notion of finally purchasing that investment always seems out of reach due to the reality of having to finance your properties. Thankfully, new investors do actually have options to finance their potential real estate ventures.
Choosing the Right Investment
If you are a new investor, especially to the real estate market, it is best to establish a firm grasp on the market and the types of properties you should be looking for. Chances are, your first property acquisition should not be a beach-front condo that will cost you millions of dollars.
Your best bet is to keep your eye smaller on cheaper properties to invest in, in order to break into the real estate market. This way, you can establish some credit if you have to finance these acquisitions through bank loans. Having successful ventures in the past makes you less of a liability to banks if you want to expand or move on to bigger and better things. Paying off your properties on time will do wonders for your credit, possibly allowing you to borrow larger sums in the future. Use every opportunity as a stepping stone to improve yourself as an entrepreneur and get ever closer to your real estate goals.
The Investments You have Already Made
Another great investment opportunity might include property that you already own. These ventures can include but are not limited to: renting your property, selling it as is, or remodeling for a greater profit upon selling. Even though ventures like these tend to require less capital for financing, they can still be rather tricky.
For example, if you rent out your property, assuming it is your home, where will you live? Are you prepared to live with a roommate? Also, if you are remodeling in an attempt to increase your home’s value before selling, you are walking a thin like between making profit, just breaking even, or even losing money on the sale. It all depends on the current market in your region and when you decide to sell.
Financing Commercial Properties
Financing small commercial properties for potential business owners to rent out is another great place to start your real estate career. Keep in mind, I am not talking about anything extravagant like a car dealership but rather a small shop perfectly fitted for a Mom and Pop small business. Your initial startup cost will, again, depend on the location and the size of your property. Also, owning the property your building sits on will be advantageous, but of course, is yet another added expense. However, owning these type of properties can yield more revenue than entry level housing rentals like mobile homes.
Investing in a strip of properties in a great business location can yield great rewards. Although when dealing with businesses, you need to be ever vigilant with the vetting of your potential tenants. You need to evaluate the business model of your potential tenants to see if their plans are sound. Also, running a credit check would be advantageous to make sure they have a solid record of paying their debts, and if their business fails, they have the means to pay you for rent. Like in any real estate situation, any one tenant will not do, especially when you start investing more money.
Financing Your Personal Goals
Finding the capital to finance your investments is a process not to be taken lightly. Hundreds of thousands of dollars, if not millions, could be on line, and making sure that investment pays off should be your top priority. New investors need to immerse themselves into the market and not rush in blindly. Managing small properties is a great way to get a feel for more involved ventures in the future. As you grow and learn in the market, more opportunities will arrive for you to take advantage of, but skipping steps is not an option. Take your time and explore options with minimal risk and lower start up cost which you feel can be paid off quickly. Most importantly have fun! If real estate does not provide the hint of a thrill or excitement, then this market is not for you. There is no way you can be successful at anything if you are not enjoying what you are doing. I am not saying there will not be hurdles to cross, but at the end of your day’s work, you should be able to confidently say it was all worthwhile.