How To Succeed In The Property Investment World
There’s no other way to say it. The size of the US property market is enormous, and it’s one of the largest in the world. One million housing units are up for sale in this country every year – and with plenty of people still looking for properties, it’s showing no signs of cooling off. But while these headline statistics may make it seem like there’s property investment opportunities everywhere you turn, it actually takes a certain type of person to make it in this world.
Many people are struggling to get on to the real estate ladder altogether. But as CNN reports, others may find themselves on the ladder but aren’t quite disciplined enough to save up to build the sort of large investment portfolio that others enjoy. This article will explain what attributes people need in order to build their property investment empires.
Be a good saver
Perhaps the main barrier to getting on the property investment ladder is finding the cash to cover the upfront costs. The cost of a mortgage down payment can easily exceed $30,000 for an average home – so for those looking to purchase a rental property or a series of them, there’s a big challenge ahead. Looking for finance for this major upfront cost, then, is a good idea. If you earn well, saving up is one option. It may require sacrifice, though, and skipping vacations and treats is common – so you’ll need to be disciplined!
It’s also important to think carefully about where you plan to invest your cash – and to be open-minded enough to know that this might not be in your home town. Sometimes, it will be: if you already own a home and are of a certain age, an equity release program for seniors in cities like New York – where the average cost of a home is around $455,000 – may open up much-needed investment cash. If you plan to buy a property to rent out, meanwhile, being brave enough to go national and choosing a place where rental yields are high – such as Orlando, Florida – may be more prudent.
As you get into property investing, you’ll likely run across many different purchase scenarios. Each may require a different approach in handling the purchase and/or rehab financing.
- Buying foreclosures: You may need hard money. That’s financing based mostly on the value of the property and not your credit.
- Buying probate property: Probate deals can be quite lucrative, but often the time to closing can be quite long. You’ll have to plan accordingly.
- Doing major rehabs: You may need to use bridge loan lenders for temporary financing until the project is ready for permanent financing.
The key is to remain flexible. Because no two deals are alike, one time you may find yourself using traditional financing for the purchase while the next deal requires you to tap into an expected inheritance with estate loans.
So while the world of property investing isn’t easy or simple by any stretch of the imagination, there are ways to enter it and succeed. You need to select your investment destination judiciously and objectively on the basis of location and purpose, for example. And by ensuring you save well enough to have the cash to cover upfront costs, you’ll be able to give yourself a good start.