Tips for Investing in Real Estate

canstockphoto6625778Real estate can be a sound financial investment, but as past years have shown, it’s not always as sure of a thing as people think. If you are going to invest in real estate, you need to be smart about how you do it. Here are some tips to help.

  1. Start by Outlining Your Goals

Before you begin, outline your financial goals. Do you need to grow your real estate business quickly, or can you take your time? A financial advisor can make this step a little easier. Avoid investing in a bunch of seminars and books, if you aren’t going to use the information they include, but do talk to a knowledgeable professional before you invest.

  1. Be Patient

Real estate doesn’t grow quickly. While you will have exciting times at the beginning, you are going to face hurdles too. You may have the perfect property in mind, only to have the closing fall apart at the last minute. You may have dry spells when it feels like you are wasting your time and your energy. Don’t give up.

  1. Learn to Spot “Wholesale” properties

Wholesale properties are properties available at a steep discount. These typically need a little work, but will bring the biggest dividends. Be certain that you study the total cost of the property, including rehab costs, to ensure you can make a profit.

  1. Learn the Tax Benefits

Real estate investors can take quite a number of tax breaks. Depreciation write-offs may be confusing, but they are quite substantial. In addition, you can claim the deductions that all business owners claim, like office supplies and mileage, to help lower your tax responsibility.

  1. Learn the 1 Percent Rule

Investment properties are often used as rental properties. To ensure that you are able to be profitable, look for a property that follows the 1 Percent Rule. This rule says that a property can be profitable if it can be rented for a monthly rental fee that is at least 1 percent of the purchase price. So, if the $80,000 house can be rented for $800 a month, it is a good purchase.

Real estate investing can be scary, exciting and profitable, all at the same time. Learn how to manage this type of investment well, and the real estate markets can provide a significant chunk of your income in the future!