For a long timeI had wanted to follow my buddy and get involved in the buying of real estate. It was something that I knew I would have to save up for in order to get the funds together to make my first purchase but it was something that I truly wanted to invest in. I not only wanted the profits that real estate investment can bring, I also wanted the thrill of buying and selling.
So I put my money together for over 18 months until I had enough to get investing but before I started, there were some considerations which I needed to make.
Which Way to Approach It
There are a few ways in which people can get involved in real estate depending on what their aims and goals are. For starters you need to make the decision between commercial real estate and residential real estate, both have their benefits and disadvantages and it is generally best to specialize in one or the other.
There are also a few ways in which you can look at making money from real estate investment, some will buy for the long term and look to make money by way of regular rental income. Others will buy properties at the low end of the market and then wait for it to pick up before selling. The final way in which you can approach real estate is to flip houses, this involves buying up cheap properties, perhaps in need of a makeover, giving them some TLC and selling them on quickly to make a small profit.
How Much Could I Afford
There are so many extra costs that go in to buying a property and it is vital that I understood these before buying the property itself. I quickly realized that my savings of $100k meant that I should really be looking for a property in the region of $60k, this would mean that I had sufficient funds to play with after buying the property and that I would have enough money to cover any fees, charges or costs in upgrading the property. I nearly fell into the trap of looking for a property in the $90k range which would have put a great deal of pressure on me financially.
Did I Understand The Market
After speaking with some friends who were also in the property market, I quickly realized that my knowledge was incredibly limited. I had to remedy this quickly so before investing a cent, I spent 6 months trying to get my head around the market, its impacts and looking at strategies in terms of how to get the most out of my investments. I am not a very patient person so this was a frustrating process for me as I just wanted to get started. Despite this, I am so glad that I dedicated that time to educating myself as I am sure that I have made much more money as a result.