The real estate market is booming and it’s never too late to become interested – and invested – in the future of the housing market within the United States. No matter where you live, be it Detroit or anywhere else in the country, now is an interesting time to look into the real estate market. Some are calling it a bubble while others have a laundry list of reasons it’s going to continue well into the future.
No matter what you think of the market, there are safe, sound, and foundational tips and tricks to heed if you’re planning on buying property and participating in this modern and COVID-driven housing market. Here are the five most important and fundamental tips for entering the market in today’s economic climate.
Know Your Market
In the past, investors could be relatively confident about their investments no matter where they were making them from or where their new property was situated. This fact of real estate life is no longer true; markets are incredibly diversified and have different degrees of volatility depending on where you’re looking and which types of property you’re thinking of buying.
The number one rule in real estate, the absolute golden tenet, is to thoroughly know your market and your property type. Different states are raising wages at different rates, property values are ballooning in some states and staying relatively flat in others, and people have different degrees of pent-up demand depending on where they live.
Supply is also an issue in many states, further driving volatility across the entire nation. It’s important to look into the future of the market you’re in; the present conditions are fine, but is your investment going to mature, or will it be dampened as market conditions change?
Always Check for Yourself
There’s a danger in investing in turnkey properties that don’t usually exist in other types of real estate investing. Simply put, turnkey companies are trying to sell you a product and will sometimes exaggerate the value of their properties in order to entice you.
This isn’t always the case, but, more often than not, you may be surprised to read their numbers vs. your own when doing research and investigation into your chosen property. This is also not to say that turnkey companies are lying; it’s really not as simple as that, as they’re trying to conduct business with you as you conduct it with them and your own tenants.
Everyone wants the same thing, which is to save or make as much money as possible. To this end, you should run the numbers for yourself when you purchase a turnkey property. Some analyses are great, and some are terrible; it’s up to you to know which deal you’re getting, just as it’s your tenant’s job to look into the property for themselves when the time comes.
Start Thinking Like an Investor
One of the primary mistakes new investors make is to passively engage with their property or forget about it entirely while they enjoy their new revenue. This is a dangerous game because it quickly leads to a lack of organization and doesn’t let you know where you have footing. When you invest in a turnkey property, or any property really, you should set yourself up like an investor.
This means two things; first, you should establish avenues for your new revenues. This can be something as simple as opening another bank account to separate your real estate and non-real estate earnings, or something more complex like setting up an LLC for yourself to minimize your liability and help yourself when tax season rolls around.
Second, you should establish an investor’s routine. No matter how passive you are, you should dedicate time and energy in your schedule to checking in with your property and tenants. Letting these slip through your fingers could be disastrous.
Explore Your Options and Stick to the Plan
Investing in real estate can be incredibly fun and exciting. In their excitement, some newer or less careful investors forget good, smart business sense. When you buy your investment property from a turnkey company, you should be absolutely certain you’re getting the best deal possible.
There are dozens of turnkey companies that have hundreds of properties; there could be several that you like and multiple properties which “fit” you and what you want to invest in, but there are also dozens that don’t. Take a good look around and examine how each company seems to operate and which properties you think will last during the duration of ownership. Once you find the property you like, pounce.
Closing the deal is probably the easiest step in the process, but don’t take it lightly. Do everything your title company tells you and make sure you’re ready to take complete ownership of the property when the time comes.
Adhere to the Four Essentials
No matter which company you’re buying from or why you want to purchase your property, there are four essential considerations to make every time. The first of these is value; do you think the house you’re being sold is actually worth the money you’re paying? What are other houses in the area going for?
Analyzing the value will tell you right off the bat whether you’re getting a good deal or are just another sucker in a seller’s market. After you consider value, you need to analyze location. Location may be important for you, but it will probably be more important for your potential tenants. In order to see good demand on the property, you need to buy where people are moving.
Location is everything in the industry and the best house in a sub-bar region or neighborhood may mean you aren’t seeing the returns you want. Speaking of returns, profitability is the third consideration. Perhaps the most fundamental and important question for any real estate investor is, “will this property offer a return on my investment? Will it be profitable?”
You’ll have to calculate this based on location, house quality, and management costs. Finally, the last, but certainly not least important element to consider, are inspections. Hire an expert and thoroughly inspect your property to make sure everything is in working order, up to code, and “move-in ready” if that’s what you’re looking for in your investment property.
Looking for turnkey rental properties for sale? At Deals In Detroit, we are here to 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.