Investing in real estate can seem a lot like jumping headfirst into the ocean. The massive waves of profit in up-and-coming markets might be enticing, but market volatility and unpredictability means bubbles form and those waves crash — like they did in 2008.
If you want to dip your toes in the world of real estate investments, read on to learn some insider tips that are sure to help steer you in the right direction.
Insider Tip No. 1: Buy in Stable Neighborhoods
Scoring yourself a top-notch rental property is one of the greatest ways to start earning a passive income, especially if your property features the tell-tale mark of a good real estate investment: location, location, location. Check out the best and worst cities to own investment properties.
Real estate insiders caution against locations where the current rental rates seem to be skyrocketing, and for good reason. Because you noticed the neighborhood means that others did as well, making it a prime spot for new multifamily construction, which would undercut your new investment.
Instead, opt for an area in a steadily growing neighborhood with a stable rental price — you’re likely to continue to grow property value and sustain the income over a longer period of time.
Insider Tip No. 2: Flips Aren’t for the Faint of Heart
For anyone who’s watched HGTV for any length of time, flipping might seem like the perfect entry point to make a quick buck in the real estate realm — but beware. Learning the art of house flipping — snatching an underloved, underpriced house with good bones with the intent to fix it up and relist for a profit — requires a lot more equity than you might be initially accounting for in both the sweat and cash departments.
Insider Tip No. 3: Learn to House Hack
Another insider tip is to “house hack” your way to an investment property — in essence, you’re occupying a property that you’re also flipping, which scores you a lower loan rate due to your status as owner-occupancy. This method is fantastic for multifamily units, since there’s less capital required up front, making it an easier route for real estate investing.
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More on Real Estate
- The Best and Worst Cities to Own Investment Property
- How to Decide Whether to Buy or Build a House
- Craziest Things That Kill Your Home’s Value
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