Investing in Real Estate

There are many reasons to look at real estate as a sound investment. In the last years, the real estate market has bounced back from a record crash. As the U.S. economy gains traction, making an educated investment in real estate can yield profits and wealth.

A key factor for today’s investors is the amount of market data available. Small investors or individuals looking to expand their portfolio can now analyze market data and make smart decisions. An essential component in the variables is the fact that the number of renters has increased significantly after the last market crash.

In order to better understand these facts, consider the following:

1. Total cost vs. value

Any property has an inherent cost to maintain and operate. Location can affect these numbers significantly. Some states or cities have higher property taxes. Rental communities or condos have association fees typically not seen with single family housing. Some places have higher insurance premiums for risks like hurricane, flooding or earthquakes. It is critical that the all the costs associated with the property are taken into account.

With your total expenses estimated, you can then decide if the property lines up with your goals for strong monthly cash flow or an increase in equity over time.

2. Short game – Long game

Depending on your financial end goal you can target areas that have the best potential. Going beyond your local market can allow you to look at investments properties that will offer a significant cash flow or that translate into growing equity over time.

3. Understanding the market

Another important aspect of real estate investment is to understand the market. Local markets respond to supply and demand but truly understanding its complex dynamics can give you the edge to make a profitable investment.

An educated workforce and demographic growth in the area will most likely translate to a higher appreciation of your property. Condos can have a great yield but could have a little appreciation.

4. It is all about the tenants

Choosing the right tools will help you maximize your investment. Using a tool such as Rentlit as your partner will can you select the right tenant. Amongst the tools we offer are background checks including credit score, and providing references. Rentlit provides the peace of mind of automating your rent collection.

5. Exit Strategy

Like any investment, a smart exit strategy will maximize your profit. The real estate market follows cycles and trends. As an investor, you can tap into local market data and analyze key indicators that will forecast rates of ownership or local comparable property values.