Choosing The Right Investment Property


If you want to invest in real estate, you probably want to make money as quickly as possible, with as little risk as possible. You can only achieve this if you know how to make smart choices. The following three things make for an excellent real estate investment to help you get started.

The first thing is to find something with a good return on investment. Real estate is an illiquid asset that require you to take money out of your liquid assets. What you should look for is to get the same or similar rate of return. In other words, you want a good cash flow property, and not a property that will only cost you more money.

Next, you must make sure your investment isn’t too risky. Real estate is always risky, but some more so than others. Try not to choose private real estate funds, fixer uppers, real estate development and tenant-in-common options. Invest in these options and it is unlikely that you will ever see a return. Instead, look for good properties and title them to yourself. This does mean that you need to take the time to analyze and research your options and to exert due diligence. Try to find a property that you don’t have to manage intensively and that doesn’t take up too much of your time. Avoid short term rental properties like vacation homes or student accommodation, or properties in bad areas for instance. A better option is a property that someone with a good credit profile is likely to rent for a long period of time. This does require a commitment on your side to treat your tenants with the respect they deserve. All properties will have some sort of issue at some point, but this should be manageable so long as you deal with them quickly.

You may want to consider investing through a REIT (real estate investment rrust). REITs are popular because they are cheaper to get involved in, but the returns you will see are not as high either. When you sign up with a REIT, your money is invested in real estate corporations. This can be anything from a construction company to a theme park. You can keep track with the performance of a REIT through the NASDAQ and stock exchange. Basically, they are like mutual funds but focus solely on real estate. Before investing in a REIT, there are a few things to learn about. First of all, look into what the economic conditions are of the areas of key holdings. Next, find out what the past performance of the REIT has been like. Additionally, their future plans are very important. Also find out who the REIT is managed by and what their experience is. Lastly, you need to look into the current state of the real estate market and how the REIT is expected to respond to that.