Real estate industry is growing at a rapid pace and is generating over $9.2 billion with over 28 million investors. With over 36% real estate investors planning to buy more property next year, and returns going high, it is the perfect time to test this growing market.
The USA is one of the best places for investment in real estate. The country also has a number of foreigners buying real estate to earn profit. However, not everyone is able to laugh all the way to the bank. There are several things one needs to take care of to be able to make the max out of an investment.
At the end of the day, the purpose of any investment is to excrete profits. However, real estate is a risky business. Prices go up and down on a regular basis, and one has to take care of taxes as well. So how does one beat the market and earn big? Here are four tips that will help:
1- Know Exactly Why You're Investing
There are several reasons why one may decide to invest in real estate. While some people invest to sell, some invest to rent. This point is important because it will help you set your financial goals and plan accordingly.
The 'time versus money' concept has to be considered as well. When it comes to real estate, if you have more time in your hand you can start with less money and vice versa.
Also, your goals will help you decide what kind of investment you should opt for. Mysquareonecondo.ca's CEO Eric Skicki says, "There are several options to invest in real estate, from condos to big bungalows to empty plots. I'd say the right option depends on the investor's requirements. If you want a regular income you can opt for condos and rent out the property. On the other hand, if you're looking at a big gain you can buy a big property and put it on the market, but the latter usually takes time."
In addition to this you can also consider commercial and residential properties. While both options are good for business, the right one depends on your requirements, budget and time in hand.
2. Do Your Research
You need to research well before you zero in on a property. One of the most important factors to consider is the city or state you'll be investing in. Some of the best states are:
- Texas (Austin is a favorite with an expected growth rate of 9%. San Antonio also comes close with 8% home appreciation rate.)
- Florida (Tampa is a good option with an expected growth rate of 5% for the next three years. Miami is also a good option)
- New York (If you can afford a place in NYC, you'll have a good reason to rejoice. While the city is very expensive, the real estate market is soaring.)
- Ontario (If you're looking at investing in Canada, Ontario is one of the hottest states with houses in Barrie, Thunder Bay, and Hamilton expected to give a return of 8-9% in the next five years)
- Alberta (Places to consider include Calgary and Edmonton with around 5% return)
Also, remember that just because a city is doing well, it doesn't mean you should invest in it right away. It should be remembered that specific areas will fetch you a high price that too for a specific property.
In addition to this, you have to take care of the legal requirements as well, especially if you are a foreign investor or are buying on credit.
Also, do not make the mistake of going for a property just because you like it, unless you plan to live there. You should think as an entrepreneur when investing and consider the option that gives you the highest returns.
3. Take Your Time
It is important to take your time, both when you're buying and when you're selling. Do not buy the first property you like, look around and compare all the options that you have. However, also remember that there is no such things as a 'perfect deal', especially when you are selling the property.
Mysquareonecondo.ca's CEO says, "Haste makes waste! It is okay if your property sits on the market for a few months. At times it takes years before a property is sold, especially if it is very expensive. However, you should also see the market trend, if the market is expected to fall tomorrow, it's better that you sell today."
4. Know Your Facts and Figures
At the end of the day, it is a financial decision and should be made with facts and figures in mind. Before closing a deal, make sure to have a look at maintenance records, tax bills, tax returns etc. some other figures that need to be calculated include:
- Your Return On Investment (expected resale value)
- Your Cash Flow (debt financing)
- Your Net Income (profit after deducting expenses)
All these figures are important and should be calculated prior to making a sale. In the same way, when you're selling a property do not just compare the price to your buying price, also see how much you've invested in the property. At times, investment is a good option. Something as small as a paint job or an extra bathroom can increase your property's worth by up to 15%.
These simple tips will help you make a good profit from the real estate market. Remember, the trick lying in doing a good amount of research and taking your time before you make a decision.