Venturing into the world of property rental can lead to a fulfilling, rewarding experience. Before you hit that sweet success point, however, you need to be prepared for what lies ahead. Contrary to most reality real estate TV shows, where houses are flipped or rehabbed in an incredibly short period of time, filling the owner’s pockets just as rapidly, it takes a lot of hard work — and often failure — to become a successful real estate investor.
Knowing what to anticipate, and potential pitfalls you might encounter along the way, can help you successfully navigate the world of real estate investment. According to landlordstation.com, 89 percent of Americans are non-investors. Of the remaining population, 3 percent (7 million) of Americans think of themselves as real estate investors and aim to buy property within the next year. Additionally, eight percent already own investment property but do not have current plans to buy more. The same source indicates that 39 percent of active investors want to increase their purchases, while 26 percent plan to buy as much real estate in the coming year as they did in the past year. Only a handful remain undecided or say that they would not buy any more investment properties.
Feeling encouraged by these statistics? Real estate investment can undoubtedly be a lucrative business. As a beginner, however, you’ll want to start off slow and work your way up. This often means starting with a list of goals, such as how much time you can consistently devote to searching for the best bargains or whether you have the skills to deal with tenants if you purchase a rental property. Figure out how much money you want to invest — and ultimately earn — from your investments.
Whether it’s a Certified Property Manager (CPM) — expert in real estate management — or a real estate investment expert, having a guide to help can be a huge benefit, especially when you’re just starting out. Some organizations specialize in specific areas. Crawford Park Financial focuses on urban apartment investment, which is becoming increasingly important due to the rising demand among millennials who are entering the market and baby boomers looking to downsize. An expert can also help you understand which properties to research while navigating pitfalls along the way. For example, investment apartments vacancies often rise during periods of economic trouble or downturn. In 2009, the rate of nationwide vacancies rose to eight percent, and many young apartment renters moved back home to save money. Whether you’re focused on a particular area or are simply curious, having a trusted guide to assist you along the way is a great start.
Before you pony up for that first investment property, make sure that you are financially stable enough for the venture. If not, you might want to wait a few years before attempting your first real estate investment. The ultimate goal is to invest with enough money left over to ease any concerns about repairs or maintenance. It’s better to purchase a property with the goal of having extra cash flow, rather than desperately needing the rent money to maintain or pay off the unit.