The perfect real estate investment is one that has high returns and very low risks. To achieve this, you need to be able to make smart decisions. The following three things make for an excellent real estate investment to help you get started.
The first thing is to find something with a good return on investment. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. You need to make sure that the rate of return you get is similar to the one you were getting through liquid investments. Basically, you must find good cash flow properties, not money pits.
Next, you must make sure your investment isn’t too risky. There is no such thing as risk-free real estate, but some risks are too high to take. Try not to choose private real estate funds, fixer uppers, real estate development and tenant-in-common options. Invest in these options and it is unlikely that you will ever see a return. A much better idea is to title interesting properties to yourself. Naturally, this means you need to take the time to do research and analysis, and you must exert due diligence. Next, you need to find a property that doesn’t require a lot of management or time. Avoid short term rental properties like vacation homes or student accommodation, or properties in bad areas for instance. You should look for properties that people with good credit profiles will rent for extended periods. This does require a commitment on your side to treat your tenants with the respect they deserve. It is impossible to never have a problem with your property, but so long as you deal with issues quickly, this shouldn’t be anything to really worry about.
These are the things to look for in good real estate investments. You want a property that requires minimal maintenance and management. Unfortunately, it can be quite hard to find properties like this. You need to have the time available to actually find these properties. You must spend the time to analyze and research any options available to you. Generally speaking, when someone wants to invest in real estate, they just want to get started straight away. Even if you have been searching the market for a long time, you should never invest in a property that you are not sure about. Make a wrong decision in the world of real estate, and you stand to loose a great deal of money that you may never be able to recover.