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You’ve heard countless people claim that investing in real estate is a great way to make money. I have a couple of concerns with anyone that says this, primarily, it gives people the assumption that you’re guaranteed to make money when you invest in properties. This isn’t always the case, as many investments can turn sour very quickly.
However, good real estate investments can be achieved, and they all follow a similar framework. In fact, here are the cornerstones of a smart real estate investment, to help you find the best opportunities out there.
Many property experts argue that the location can make or break a property. Let’s face it, no one wants to live somewhere undesirable. This is why investments in houses in rundown areas with no access to schools, shops, or healthcare, never succeed.
Then, you see loads of successful investments in properties that are located in desirable places. I mean, look at some of the listings from The Bartikoski Group, here we have homes situated in a nice location by a lake, in a friendly neighborhood with no crime. But, this doesn’t mean urban areas aren’t desirable locations either, you can get houses in busy cities that are popular because they’re close to everything. Think about the location first, and you’ll soon realize if you have a worthwhile investment or not.
Moreover, thanks to the widespread availability of real estate exchange-traded funds (ETFs) and real estate investment trusts (REITs), investing in real estate is not just about purchasing a property of your own – accordingly, if you would like to learn more about real estate ETFs or REITs, this useful guide to reit rendite (real estate investment trust returns) can provide some helpful tips.
Notice how I’ve said ‘good’ price here and not ‘cheap’ price. The fact is, a cheap piece of real estate isn’t always a good purchase. It may seem like you have a lot of scope to make a profit, but it might turn out that the reason it’s so cheap is that the property is highly undesirable. Instead, look for prices that offer great value for you as an investor. The best way to do this is by looking at the average price of similar properties in the same area. If you find one that comes in a little bit below average – but still has a great location – then there’s the potential for profit!
A Buyer’s Market
Lastly, most of the best real estate investments occur during a buyer’s market. What does this mean? Basically, it means the real estate market is in such a place that the buyer has more control of the negotiations. In essence, there are lots of properties for sale, but not many people looking to buy.
Generally, you enter a buyer’s market when times are quite tough, and the economy isn’t at its best. This means fewer families are looking to spend money on homes, which means investors like you can swoop in and snag a few bargains. Then, if you want to flip the property for a profit, wait until it turns into a seller’s market where you have the advantage again!
Well then, these are the three cornerstones of a smart real estate investment. If you find an opportunity that ticks all three of these boxes, then you can be fairly certain it’ll make money. If all boxes aren’t ticked, then perhaps reconsider a different investment, or risk losing money!