10 Real Estate Investing Tips
If you are looking to get started in real estate, you’re not alone. Thousands of people across North America are looking to enter the real estate market and start building their fortunes. Before you begin looking at houses, however, there are some things you need to do first. Here are some real estate investing tips to help you get started.
1. Gather your team of experts: This includes a real estate agent, real estate lawyer, home inspector, insurance agent and a mortgage specialist. Meet with each of them and let them know what your goals are for real estate investing. Each of them will be able to give you professional advice that will save you both time and money.
2. Get pre-approved: You can’t very well search for houses until you know how much you can afford. Your mortgage specialist can help you with this.
3. Get to know the 10% rule: Monthly rent x 12 = Gross annual rent. Purchase price x 10% must equal or be less than gross annual rent. Unless a house qualifies for this rule, look elsewhere.
4. Create Your File System: Having investment property means a heft amount of paperwork. Keep a system that includes deeds, insurance and mortgage info, as well as tenant information.
5. Set your goals: Know why you’re getting into real estate investing; do you want to collect rents every month? Do you want to buy handyman specials and sell them for a profit? How many homes do you want? What area do you most want to invest in?
6. Study the area where you are looking: It’s important to know what’s going on in your desired area; this includes crime rates, job and unemployment stats and new industries.
7. Never buy without getting an inspection: A good inspector will be able to tell you the condition of the furnace, roof and other major components of the home.
8. Have three month’s worth of expenses for each investment: For each home you own, keep three month’s worth of expenses in a bank account; this will come in handy when you need to do major repairs.
9. Hire a property manager: You don’t want to be called at 2:00 in the morning do you? Hire a manager to take care of your tenants and all of the details such as repairs, etc.
10. Familiarize yourself with the tenancy laws in your area: As a landlord, it is your responsibility to know how to deal with tenants, and what you can and can’t do. Each state/province is different, so call your local government office and get a copy. Your tenants will know the law – so should you.
As you can see, there is more to investing in real estate than just finding a nice home and collecting a rent cheque every month. You must do your due diligence to make sure that your investment doesn’t cost you more than you anticipated. You will also need to learn what it takes to be a responsible landlord. Real estate investing can be a very rewarding way to make money and give you a substantial passive income every month.
Although Amber Tate has successfully invested in many real estate properties over the past decade, she still strives to save every dollar she can. Her savings on insurance has come from obtaining affordable Canadian life quotes and she recommends you do the same.