You’ve been wanting to take on some lucrative investment deals for a while now and have finally decided to try your hand at real estate investing. Although it’s all the rage, it is not for the faint of heart. Real estate investing requires the necessary research to know how to successfully invest and manage property to earn profit.
This article will provide six key points you should know to help you on your real estate investment journey.
1. Know The Risks
From the outside, owning and selling investment properties looks like a glamorous, money-making venture. However, real estate investing is not always a bouquet of roses. Risks are possible, so be ready. Here are some things to note firsthand:
Know that real estate may not pay off immediately. When buying property to sell it, it’s likely you will have to fix up the place to get a good profit from it. That means pouring money you saved from the purchase into turning it into a dream home. If you don’t consider yourself a handy person around the house or know a lot about construction, that means you will need to spend more money on labor for the person(s) who will be fixing up the property.
It’s also important to know that not all tenants will be the dream tenant. There is the possibility your tenant could have a hardship that causes them to fall behind on their rent, in which case you will need to take over. With that comes the possibility of having to evict someone and that is not always pretty to do.
Given all of this, you need to make sure you’re financially prepared to take on such projects in the first place. If you’re not financially stable to maintain your personal financial responsibilities, cover the cost of upgrading a home, and covering rent for a tenant, this type of investment could cause you everything you have.
2. Know Your Objectives
Investing in real estate can be a unique opportunity to grow your wealth, if you know why you’re doing it. Identifying your goals and objectives can help you decide which property to buy.
Do you plan to use the home occasionally and rent it out the rest of the year? Or are you looking for a property that’s solely an investment to generate passive income that could eventually become your sole source of income? All of that will need to be taken into consideration before investing in anything. Knowing your why will determine how much of an investment you’re looking to make. That in turn, will determine how much money you will need to borrow, which will affect your bottom line.
As you compare the pros and cons of various real estate investments, be sure to make a reasonable estimate of the amount of rent you’ll be able to charge so you can put together a realistic cash flow plan. The money coming in each month needs to cover expenses, including mortgage payments, insurance and unexpected costs, so do the math to ensure you can meet your objective.
3. Know How You Will Manage Your Property
When it comes to real estate properties, you will either have to manage the property yourself or pay for someone else to do it. Either way, it will take money, so ensure all of this is included in your overall cash flow plan. If you do it yourself, it will also take time, work and man hours. Most people start out managing the property themselves to save money, but soon realize the additional work and potential stress and headaches it can bring. That is where property management companies come in. In addition to the daily maintenance of the property, property management companies can also help with selecting tenants or evicting them, if necessary.
4. Know How to Treat Your Investment Like a Real Business
In addition to helping run your rental properties, there’s another advantage to working with a management company: You can deduct these expenses on your taxes, along with other expenses such as mortgage interest, property tax, depreciation, repairs and operating expenses. While that’s a nice perk, it’s also a sign that your financial situation becomes more complex once you own rental properties.
So, make sure to also include a tax professional in your plans, so they can reduce your taxable income when it comes to your business. You can start by separating your real estate account (business) from your personal account. You may even want to consider setting up a legal business entity, like an LLC, for your investment property(s). That will help minimize risk in the event a tenant or someone else files a lawsuit against you. The LLC will protect your personal belongings in case of this. You may also want to add liability insurance to that plan.
5. Know the Ins and Outs of the Business
It’s important to take the time to thoughtfully research every aspect of real estate investing. Again, it can be the best thing since sliced bread or it can be your biggest nightmare. Especially if you plan to be in this for an extended period, make sure you’re aware of how the business works.
It may not be wise to assume that every month there will always be someone living in your property. Be familiar with zoning laws and laws of homeowner associations (HOA) where you buy. Some HOAs require the owner to pay fees just to rent out property. Then there are other regulations within the city that you may need to know.
Also, you want to make sure you don’t over invest in the property. There may be some things you can do without, that will save you money overall. To ensure you’re learning as you go and not taking on too much at one time, take it one property at a time so you can learn all the necessities of how the market works. Then when you’re comfortable, consider taking on more properties.
6. Know Where to Buy Property
Knowing where to buy your rental property is also an important decision. If you’re looking for turnkey rental properties, Deals In Detroit is a perfect place to start. We cut out the middleman, meaning we can offer transactions with no added or extra agent fees.
We can help you find the best Detroit turnkey investment properties in the state that help you build your investment portfolio. Purchasing a property in Detroit sets you up for a successful residual income for now and years to come.
We also offer peace-of-mind property management services. We have over 40 years in the property managing business right here in Detroit. With this much experience in managing turnkey rental properties, we stand by our products with 100% confidence, guaranteeing your turnkey will end out on top.
As property managers, we offer:
On-line accounting: Be constantly in-the-know with our online accounting system. This allows you to view all your turnkey income details 24/7.
Direct rental payments: Don’t go chasing your money down from tenants ever again. We provide you with the capabilities to have all your rental payments go directly to your bank account.
Local management: With our local management system, you can count on us being there for you at all times. With our hands-on approach, we won’t put you on hold.
Full-service maintenance: We know buying a turnkey rental property involves maintenance that you don’t have time for. No worries! We offer full-service maintenance to handle anything that may arise on that property.
Low prices and a high-demand market means you should consider managing a property right now! When you work with a local property management company, they’ll be there to answer any questions or fulfill any requests 24/7. This top-notch service will keep renters happy and encourage them to keep leasing!
At Deals in Detroit, we buy turnkey rental properties, restore them, screen and place tenants, and sell these rentals to investors like you! So, if you’re ready to make smarter investments, increase your ROI and start earning residual income with Detroit investment properties.