How To Become A Real Estate Investor

Especially with the downward slide in the stock markets, every one wants to become a real estate investor. And why not? The path to success lays that way; as everyone knows that real estate is the ultimate investment tool. Before you decide to become a real estate investor, think why you want to become one. It is not everyone who can turn quick profits in real estate. To become a real estate investor you need to invest for long terms, sometimes as much as 10 to 20 years before you can get return on your investments.

If you are in a job that gives you a regular salary, do not quit it to become a real estate investor, just because everyone else is doing so. To become a real estate investor, start part time, and get a few deals under your belt that are successful. If you are not successful as a part time investor, do not let anyone fool you into thinking that you can be successful on a full time basis.

Developing A Real Estate Investment Strategy

If you have entered the real estate market because someone else did it, and made a bundle, now is the time to move out. There is no guarantee it will work for you, too. 

As a real estate investor, if you are new to the market, you are bound to make mistakes, leading to losses. You will need to plan strategies for investing in real estate. As you will be selling your real estate at a later date, and that too at a profit, you will need to have marketing strategies in place. To become an investor in real estate, you must develop a vision of the future, develop a strategy, and take action as required by that strategy. 

• Buying at bargain prices - You need to buy at bargain prices to make a neat profit when selling later. Though not very easy, you can make bargain purchases where you pay only around 80% of the market value. Try to invest in foreclosure properties. Buy properties that are off the beaten path, or a property that has, say, a massive roof leak and has been condemned by the board of health. A real estate investor, due to these adverse aspects, avoids such properties, and you can have them at very reasonable prices.

• Upgrading the properties – You can add market value to the properties by upgrading them – like the above property with a massive roof leak, and condemned by the board of health. Assume you paid $200,000 for the above property, which has a market value of $300,000. Making appropriate roof repairs to upgrade this property could cost you around, say, $40,000. You can easily sell this property at slightly below the market value for $280,000 or $290,000, making a neat little profit. 

• You will need to make proper changes, and not just cosmetic changes. Cosmetic changes will not fetch you the price you seek, and may lose in the bargain. 

• Flipping properties – This strategy, though quite common, is frowned upon at times and is also risky. As a form of marketing strategy, a real estate investor does buy and hold properties for a short period, and sell it at a profit. This is only workable on the assumption that the real estate prices will rise. 

What contingency have you planned if you are not able to sell your property fast? Flipping is not an easy way to make money, as you may have to hold on to your real estate property due to the adverse market trends. Some real estate investors combine both the strategies of upgrading the properties and bargain buying to make profits. 

As a real estate investor, do not always depend on the principle that the property prices will always rise. This is not a safe principle, as property prices are known to fall in times of slump. You must develop strategies in place of having blind faith. 

Retirement And The Real Estate Investor

Many people, on the verge of retirement, become real estate investors. As investments in real estate have always kept ahead of inflation and taxes, this is an ideal time to turn into a real estate investor. If you are planning for your retirement, you will benefit more by investing in real estate than by leaving money in taxable accounts, as historically, real estate values have consistently outpaced inflation. Investment real estate provides you with tax breaks instead of liabilities.

Your decision to become a real estate investor depends on your long-term strategies. Your first step towards financial freedom, as a real estate investor is to develop a plan and make it work.

 

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