Do you think about starting a career in real estate investing? Here’s how you can know if you are ready to make your first real estate investment!
If you’re considering getting into real estate investing, you have to be prepared before you spend money on your first property. This business isn’t the same as other investing branches, and it takes some special skills – and preparation. For people wondering if right now is the good moment to make your first real estate investment, here are a few signs that you are well-prepared:
You Already Have Enough Money on Your Savings and Retirement Account
Before you make your first real estate investment in Milwaukee, you’d want to ensure you already have plenty of money saved for your retirement. You should also have some cash leftover, just in case something goes wrong. You don’t want to leave yourself stranded in case of unpredictable situations. This money should be a foundation for any next step you might be taking. Not to mention, this can ensure you get a better mortgage.
You Have Enough Capital to Get Started
Of course, before you make a first real estate investment, you need to have the money for it. If you don’t have enough cash up front, you may not be able to purchase a property or to ensure you can save the situation in case it gets out of hand. In fact, purchasing a real estate investment is in a way more difficult than buying a home for yourself. Some lenders see rental properties as risk, so they’ll require larger down payments and higher interest. Count on paying at least 20% for the down payment. This isn’t the only reason you’d want to have some cash saved. You’ll also need to spend a lot on maintaining the building, whether it’s repairs or just regular cleaning. Not to mention the waiting period before you find reliable tenants. As you’ll become the legal owner of the property, you’ll also be the one reliable for holding costs during this time.
You Have Enough Free Time
Time is of great value when it comes to real estate investing, and you have to be prepared you’ll spend a lot of it on your new business. You have to have the time to manage the property accordingly, and to stay on top of the game. Not to mention the time you’ll need to spend hunting for properties and sending letters to the people from the community. This will probably take you the same amount of hours as your full-time job! And if you want to become a landlord instead of flipping houses, then you have to consider you’ll have to do a lot of customer service for your tenants. If you’re not prepared for that, and if you can’t make the commitment, then this business is not for you.
You Have a High Stress Tolerance
In order to be a successful investor, you have to understand that this business is a huge risk. You shouldn’t make your first real estate investment if you easily crack under the pressure. Investing in real estate takes time before it becomes profitable, and there are no guarantees. In fact, many people argue whether or not real estate investing is a higher risk compared to, for example, stocks. This all can depend on factors such as your location and timing. However, in situations of crisis, real estate can hold much better than other markets. This is because it’s more illiquid than stock market and similar.
You’re Familiar with the Real Estate Market
Knowledge is the key when it comes to real estate investing. While experience is mandatory, you have to know a little bit about the local housing market before you spend a lot of money on the property. If you’re entirely unfamiliar with the area and local real estate prices, this likely isn’t for you. Before you make your first real estate investment, you have to understand the market, as well as to do research on property types and various investing strategies. Not all properties are equally profitable on all areas, and you have to have a good plan. Spend some time online, read some real estate investing books. Learning all the necessary information does take some time, but it isn’t impossible. You can even ask some experienced real estate investor to share some pieces of advice with you. Teamwork is never a bad option.
The Bottom Line
Based on everything you’ve read, you alone should understand whether or not you’re prepared to take a risk and make your first real estate investment. Sure, this business does also require some luck, but if you have all the necessary requirements – and if you are persistent – you are sure to succeed. Just arm yourself with some patience and you’re good to go. While investing in real estate is stressful, if you plan ahead and are prepared for some sacrifices, you can achieve a huge profit. We at Sparks Property Investors LLC believe in you!