Ready to Take Your First Steps Toward an Investment Property? Here's Help!

Spring just seems to have a way of making things blossom; buds begin to bloom, seeds begin to grow and even many creatures bring new life into the world in springtime. In perfect coordination with spring, the real estate industry also seems to blossom during this season of renewal. As the spring home-buying season begins to heat up, it may have current homeowners looking for a way to make their own bank accounts bloom by investing in available real estate.

But, diving into a real estate investment may also make first-time investors feel a lot like one of nature’s brand new babies attempting to take its first steps in the world. Where to begin? What are the first steps to investing in real estate?

A great first step is deciding what type of investment best suits you. Basically, there are two routes that first-time investors often go. The first is buying a property with intent to become a landlord. The second route is buying a property with plans to flip and sell it.

When buying real estate with plans to become a landlord, investors need to realize all that they will be responsible for, including the mortgage, taxes and costs of maintaining their new property. Of course, the perk here is that a tenant will be contributing to those costs. Many landlords charge enough rent to cover all of the above costs and some even charge more, so that they see profit right away. Ultimately, a real estate investor/landlord makes their profit once the property is paid in full or it appreciates to a value higher than the amount due, leaving a valuable asset the investor can either sell or continue to rent out.

Becoming an investor/landlord may sound like a fool-proof way to make a profit, but you also need to consider the time it may take to occupy your investment property. Rental properties also can come with tenant issues, like late payments or property damage. Some landlords choose to hire a property manager to take care of their day-to-day tenant issues. Of course, that comes with a fee. In these instances, the landlord may see negative cash flow, but by choosing an investment property in a highly-sought rental area, landlords can help ensure a positive cash flow.

Investment groups also exist for investors who may not be interested in being a landlord. These groups may share ownership of an apartment or condominium. Though a single investor may own one or more units, typically a company manages and maintains every unit within the property. Certainly, the management company collects a percentage of the monthly rent, but the investor is freed from some of the traditional landlord roles. Many see investment groups as a safer way to delve into a real estate investment.

Buying a property to flip and sell is another route for people looking to invest in real estate. Often times, investors will seek low-cost properties that need a little tender loving care. They’ll make the necessary repairs, renovations or other improvements then list the home for sale at a price that more than covers what they paid in total. This option is great, assuming that investors have the upfront capital to make all needed home improvements. Selecting the right property to flip in a sought-after area is also very important, so that once the home is flipped, it does not sit on the market for long.

Researching the real estate market and working with a trusted agent are great ways to help select the right real estate investment property. Contact an experienced Berkshire Hathaway HomeServices The Preferred Realty agent for help in taking your first steps toward investing in real estate today.