Real estate investing is a topic that many people wonder about. The earning potential of a smart investor is extremely high, because unlike nearly every other type of investment, real estate does not typically decrease in value.  When you are looking for a way to ensure your security for the future, or to build a retirement portfolio, real estate is a good vehicle to use. Here are 6 things that you might want to know about real estate investing.

1.    Budget your time wisely. If your intention is to purchase a home and restore, repair or remodel it in a short period of time before re-selling the property, you need to pay attention to the time that the work on the property is taking.  The problem that many first time investors run into with house-flipping is that they did not expect the work to take so long.  When delays occur, and mortgage payments are accumulating in addition to the cost of materials and labor it can definitely make for a stressful situation.  Be realistic with estimates, and always have cash at the ready should you encounter an unexpected expense.

2.    Consider flipping a house “as is”. When flipping or buy-repair-sell is your thing, you might want to consider the advantages of flipping a home as is.  Believe it or not, this technique is particularly popular among investors who purchase properties when the market is favouring sellers.  The advantage is that there are no out of pocket repair costs, and the property can be sold much faster.  Areas where this technique would be the most beneficial to investors include neighbourhoods that are currently in transition or where redevelopment has become a priority. 

3.    Know the market you are buying in. Before you purchase an investment property, take the time to closely examine the real estate market in your area.  Depending on the market, you may want to adjust your investment strategy. For example, if you are interested in flipping a home – you wouldn’t want to do it in an area where the market is slow and sellers’ are finding their homes still on the market after 12 months.  On the other hand, if you are considering purchasing a multi-unit property, you wouldn’t want to make that purchase when the market was leaning toward the sellers.  This would result in you paying significantly more than the value of the property.  These are just a few examples of how paying attention to the market in your area can truly make a difference in the type of property that you decide to purchase and when you decide to purchase.

4.    Have an exit strategy. Before you buy any property, you must have at least one exit strategy for getting out of the property should you ever need to. This could be something as simple as placing the property on the market or it could be as complicated as selling the property with owner financing.  Regardless of who you talk to, you will quickly learn that the most successful investors are those who know what they are going to do with a property in the case of a bad turn of events – before they even decide to buy that property. Take a lesson from the pros!  Never buy a property that you cannot get out of quickly and with minimal cost to you.

5.    Start by purchasing a home of your own. If you are not already a homeowner, it is probably a good idea to purchase a home before you purchase an investment property.  There are several reasons, but perhaps the most important is that you will learn the process of purchasing a property by actually buying one. It is not unusual for investors to turn their first home into their first investment property, because the property and the market become familiar entities.

6.    Always be learning. Just like almost every other business, when you are starting out you do not have access to the tricks of the trade. Read everything that you can get your hands on, and more importantly you need to make contacts in the real estate business. This could include other investors, real estate agents, financing specialists and even contractors. A good way to start is to attend any real estate seminars being offered in your area.  You never know how the people you meet there might be able to help you to succeed with your own investments.

Hopefully, the information presented here has given you new insight into the world of real estate investing. Our intention is that you can now take this information and put it into play in your own investment plan.  Careful planning is the first step to financial freedom, and real estate is an excellent vehicle for carrying out the plan.