There’s a lot to learn about real estate investing when you’re first starting out. It’s much more complicated than investing in the stock market because of all the legal implications, the financial nuances, and the due diligence which is required. To get started with the basics of real estate investing, here are some important things to remember.
Location Is Super Important
Before investing in any real estate property, make sure that it’s in a good location. It won’t matter if the building itself is the greatest-looking thing in the county, if it’s situated in an area which is considered undesirable by the local population. A better approach would be to target the worst house on the best street in the neighborhood, and that will allow you to build equity up in your new investment.
Make Sure You Understand Tax Implications
The federal government offers major tax benefits to individuals who invest in real estate, and with good reason. If not for all these private investors, the government would be responsible for providing the housing. For this reason, the government makes some major tax exemptions and deductions available to real estate investors, and if you know what these are, you can take full advantage of them.
Find Wholesale Properties
If you can avoid paying full price for any properties you invest in, you’ll always be ahead of the game. Wholesale properties are often offered at a significant discount, and while they might need some repairs, you’ll still probably come out ahead because the purchase price is so low.
Use the 1% Rule
To decide whether or not a property is worth the purchase price, you should use the 1% rule as your guide. This rule states that any income-producing property should be capable of generating 1% of the purchase price every single month. As an example, if you pay $100,000 for a property, it should produce $1,000 of income for you every month.
Know Your Credit History
Chances are, you’ll need to borrow from some kind of lending institution in order to pull off your next real estate transaction. You should know exactly what’s on your credit history report, and you should take steps to keep it as positive and clean as possible, so your chances for approval are maximized.
Need Cash for a Real Estate Investment?
If so, we may be able to provide the financial assistance you need. Contact us at Infinity Lending Solutions so we can review some possibilities for getting you the needed capital for that next big real estate transaction.