What to know before investing in real estate

For inexperienced investors there are a number of things you should know before investing in real estate. Here are some of them.

Investing in real estate can be a good move for many individuals and businesses hoping to make a profit from renting out properties.

While it may seem like a simple task of buying good property, renting out to tenants and ensuring a profit is made, there is a lot more to it.

Before you begin searching for real estate to invest in, it is important that you are aware of what to look for, what affects the price and how to do it efficiently.

For inexperienced investors there are a number of things you should know before investing in real estate.

Local pricing

Checking local price trends is essential before making a decision on property to invest in. There may be certain areas where the price of homes is increasing at a much faster rate, and therefore it makes more sense to purchase one here.

To gain a good idea of what the going rate is, have a look at what amounts property in your chosen area have sold for, to ensure you are not being overcharged.

Perks of the area

There are a lot of factors that can increase a home’s value and also make it more attractive to tenants. If there are good schools in the local area it will be easier to entice families, as will nearby parks, shops and other amenities.

It can be worth seeking out such facilities first, before deciding on the area in which you wish to invest in real estate. School rankings can often be checked on the local council or government website.

Market risks

Inexperienced investors need to be aware of the risks involved with real estate. It can be an inefficient market, as each property has its own characteristics that will increase or decrease value.

It brings levels of subjectivity that can throw off inexperienced investors. Plus, the real estate market isn’t particularly liquid, and they can be unpredictable.

Occasionally they slow down, meaning you have to wait to make a profit.

Your goals

Before deciding to invest in real estate, conduct a thorough financial analysis to determine how much you can afford to invest.

There are options such as financial help from Secure Trust Bank for real estate finance. Think about your situation and aims for the property, such as how long you wish to own it for, what time you intend to sell, if ever, and other considerations.

This will help create a clearer plan when investing in real estate.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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