The perfect real estate investment is one that has high returns and very low risks. You can only achieve this if you know how to make smart choices. To give you a foot in the door, consider the following three things that make a great real estate investment.
First, you need something with a good return. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. Try to make sure that the return rate you get is the same as what it was on your liquid assets. In other words, you are looking for a property with potential cash flow, rather than a money pit.
Also, make sure that your investment isn’t too risky. Real estate is never risk-free, but some have much higher risks than others. Try not to choose private real estate funds, fixer uppers, real estate development and tenant-in-common options. Indeed, with these options, so much can go wrong that you are likely to never see a return on your investment. Instead, look for good properties and title them to yourself. These decisions should be made based on research and analysis, as well as due diligence. Stay away from properties that have to managed intensively or are otherwise time-consuming. Stay away from student rentals, vacation properties and bad neighborhood homes, for instance. Try to find a property that someone with a good credit profile will want to rent for a long period of time. You will only be able to achieve this, however, if you also commit to being a really good and respectful landlord. It is impossible to never have any problems with a property, but if you can resolve those issues quickly, this shouldn’t be too much of a problem.
These are the things to look for in good real estate investments. The ideal investment property is one that doesn’t require too much maintenance or management. Unfortunately, this can be quite difficult to achieve. To find these properties, you will need to invest quite a bit of time. You will need to look into all your available options and research and analyze them properly. In many cases, someone who wants to invest in real estate is impatient to actually get started. You need to be very careful to not jump into a poor investment just because you cannot find something good straightaway. Make a wrong decision in the world of real estate, and you stand to loose a great deal of money that you may never be able to recover.