6 Tips for Smart Real Estate Investment

Real estate investing can be an exciting opportunity and a wonderful way to diversify your portfolio. However, as with anything there are better and worse ways to go about it. Today let’s look at 6 tips for being smart as you make your real estate investments. 

If you are looking to get into wholesale real estate,  a wholesale investment brokerage company is one of the smartest ways available in which to invest.

The process starts with the company helping you to find investment properties that meet your needs and preferences. Then they connect you with competitive lenders to help you fund the deal, after which point you hire a contractor to fix the property. After that, the property is yours to either flip or hold onto for cash flow.

We’ve talked before about ways to invest in real estate, and this is one of the best. Any wholesale investment brokerage company worth its salt will have a great deal to offer you to help you get started and become successful.

The benefits of going with one of these firms start with savvy agents who know what they are doing and can guide you each step of the way. They will also have extensive networks that can offer you premium, top-of-the-line deals, even in competitive, quite hot markets, and will avoid participating in bidding wars or in price gouging.

The ideal situation in real estate investing is one in which you are able to acquire a property cheaply, spend some money fixing it up, and then either realize a substantial cash flow or flip it and sell it dearly.

But where to find such a deal? The answer could not be clearer: your very best bet is to find a neighborhood that is up-and-coming, a neighborhood that still has plenty of properties available cheaply—especially of the fixer-upper variety!—but which is showing important signs of growth.

Find a neighborhood like this, and you will be able to step in at the very best time, when costs are still relatively low, put in some additional money to fix up a property, and then sell it or hang onto it at precisely the time when it has become particularly valuable.

Another important tip is to not limit yourself to one geographical locality. Instead, diversify your investments to other geographical areas.

This is smart because it embodies the principle of not putting all your eggs in one basket. No matter how smart and well-informed you are, you can’t predict everything, and diversifying your profile means more chances, more opportunities.

Of course, this also means you’re less vulnerable in the event that something goes wrong. If things don’t go the way you expect, if you lose money on a property or it simply doesn’t pan out as well as you had hoped, you’ll have other investments working for you.

No matter how you look at it, this is a smart strategy.

There’s a tendency among some investors, especially staring out, to over-rehab: they take a fixer-upper and decide it needs to become a marvel before they can sell it off.

Avoid this temptation. Your property doesn’t have to be unimpeachable before you sell it off (if you’re flipping it) or rent it out. Yes, you want it to look good and to be valuable, but you don’t need to go over the top, either.

Why is this important? Simple: if you over-rehab, that’s excess time, money, and stress you’re spending on something to make it better than it actually has to be.

To reduce this to a simple rule, nice and modern is good, over-the-top-extravagant is extra headache and money.

Over time, you’ll acquire new investments and seek to make the most of them. One pitfall you’ll want to avoid as you do this is the pitfall of over-leveraging.

Instead of mortgaging all of your rentals, mortgage some of them and keep others clear. This is a good balance of playing it safe and being able to do more than you would be able to do if you had them all free and clear.

Do this well, be smart about it, and there’s every reason for you to succeed.

Maintenance issues are one of those things you’ll want to be alert about and nip in the bud now, rather than leaving them until later. If you spend a bit of time and money fixing a problem while it is still relatively small, you’ll avoid potentially a lot of pain and hassle and added expense later.

Real estate investment can be the key to a new future of financial success. Follow the 6 tips we’ve discussed here, and you’ll certainly be off to a good start.