The goal of any real estate investor is to earn as much as possible with minimal risk. To achieve this, you need to be able to make smart decisions. Luckily, if you know the three things that indicate a great real estate investment, you are a step closer to achieving that.
Do not invest in real estate before you actually have everything you need. To get started, you will firstly need to have investment capital. Also, you need to learn about the real estate market and you need to get to know a certain neighborhood.
Next, you must make sure your investment isn’t too risky. Although there is always a risk in real estate, some options are higher risk than others. You might want to stay away from fixer uppers, private real estate funds, tenant-in-common options and real estate development. Invest in these options and it is unlikely that you will ever see a return. Instead, choose to have titles that are totally yours, on properties that are interesting. Of course, this takes a lot of research, analysis and due diligence. Do not pick properties that will be highly time-consuming through managing them for instance. If at all possible, avoid properties in bad areas, college homes and vacation rentals 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. Of course, this also means you have to know how to treat your tenants properly. There will always be issues with rental properties, but so long as you resolve them quickly, you should have a good investment.
Another option you have is to invest through a real estate investment trust (REIT). Although this means you don’t need as much money to get started, it also means the returns are smaller. Working with REITs basically means you invest in other corporations. This includes things such as shopping malls and industrial complexes. You can find the value of a REIT on the stock exchange and NASDAQ. Basically, when you invest in a REIT, you are working with a type of mutual fund that looks solely at 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. Find out how the REIT has performed in the past. Also look into their future plans. 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.