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It is very tempting to overlook certain details, when they can make all the difference between a high-return investor and an ordinary investor. If you want to be a high-return investor, then follow our advice. At first glance, the five points discussed in this post may seem too simple, but they are the basics you need to know in order to start in the right conditions. Don’t make the mistake of neglecting these tips when you start investing in real estate.
1. Define your strategy
Your strategy constitutes the basis of your project. Having a solid strategy allows you to stay the course, reach your objectives and not spread yourself too thin. This step is very important, because in order to successfully carry out your investment project, it is necessary to ask yourself the right questions and to be well-prepared beforehand. Usually, when you invest in real estate, if you resort to the bank or to other financing organizations, you are committing yourself to the long-term. Thus, it is primordial to consider all the risks and to choose a strategy that fits your situation. Setting up a good strategy requires having a solid knowledge of the sector. In order to speed up the process, it is essential to get trained on the subject.
Related: 8 Proven Ways to Make Money in Real Estate
2. Define your budget
In this field, it is very important to define your budget beforehand and stick to it. Real estate is a very vast field that has the advantage of being accessible to most budgets. If you possess a small budget, you can start with a parking space, a cellar or even a cheap apartment, for example. As your budget increases, you will have more choices. And here, you should choose according to your strategy so that you don’t spread yourself too thin.
If, for example, you want to increase your assets in order to become an annuitant and make a living from real estate, a rental property remains the best investment to choose. There are several options: Apart from a traditional rental, you can exploit other forms of rental, such as a seasonal rental, a house or an apartment sharing, in order to increase your cash flow. It is also possible to profit from a resale after a renovation. As you can see, there are many possibilities, but everything depends on your strategy.
3. Build a team
You know that a property purchase cannot be made alone. You will have to work with several people to find the rare pearl. It is therefore important to build a team that will help you to acquire your property in the best possible conditions. In the search for your property, you can choose to rely on real estate agents, sellers or bailiffs (some bailiffs have access to a list of properties for sale). For the financing of your property, you will have to deal with a bank or a financing organization and also with a notary.
For the calculation of the profitability and for the choice of your tax regime, you will need a chartered accountant or a tax lawyer. For renovation and various works, you will need to collaborate with a contractor, a plumber, an electrician and craftsmen. The rental management can be directly done by you, but if you do not want to deal with it, it can be delegated to another organization. To ensure that everything runs perfectly, the help of a coach to accompany you in your project can be very useful, especially if this is your first investment.
Related: 4 Reasons Why Building a Real Estate Team Is Necessary for Survival In Today’s Economy
4. Buy with the objective of making money at the time of purchase
When you invest in real estate, you have to put aside all your emotions in your decision. Many people forget that the deal is made at the time of purchase and not at the time of resale. They act depending on their desire for something, which is only emotional and not born from a well-considered decision, leading to the purchase of a property at a price that is often higher than the market price.
Generally, when buying this type of property, these people think that it does not matter, because they will sell the property for twice as much five years later. But, nobody knows what will happen in five years! However, what we can be sure of is that a high-purchase cost will affect the profitability of your project. In the same perspective, it is recommended to negotiate (within reasonable limits, of course). Keep in mind that the first price offered by the seller of a property is often overestimated, as it leaves room for negotiations.
5. Be patient and persevere in your search
Finally, you must have patience. Finding a property that corresponds to your goals can take time. One of the biggest mistakes that new investors make is rushing into the first property they visit, even if the cost is too high and the property does not fit their strategy. Some people finally give up after a few months, because they haven’t found a property that is profitable enough. In the same way, expanding your assets will take time. Contrary to what is conveyed through the media and the success stories, wealth is not created overnight, it takes time. And for that, you will need to follow a well-defined strategy.
Related: Creative Financing Strategies for Real-Estate Investments
This article is from Entrepreneur.com
