Are you looking to diversify your investment portfolio and add real estate into the mix? Real estate is one of the safest and most proven ways to invest your money and grow your wealth. But investing in real estate can be overwhelming, especially if you’re starting out. In this guide for beginners, we’ll walk you through everything from determining your goals and sorting out your finances to defining your target audience and finding the right property. So let’s get down to it—it’s time to learn the steps for investing in real estate!
Step 1: Determine Your Goals
The first step to investing in real estate is knowing your goals. Are you looking to generate a passive income? Are you hoping to fix and flip houses? Or are you interested in long-term appreciation of property value? Knowing your goals will help you to determine what type of property is right for you.
Step 2: Sort Out Your Finances
Before viewing potential investment properties, you will want to know your budget. An experienced and knowledgeable mortgage professional can greatly assist you when purchasing your investment property. They will check your financial standing and determine how much you qualify for. They will explore different mortgage options and help you decide which suits your current financial situation best. Your Realtor will be able to provide recommendations on mortgage professionals they work closely with and trust.
Buying an investment property is a significant commitment, so it is crucial to determine if you are financially capable of beginning this journey. However, many people don’t realize that they may be sitting on a pile of cash in their primary residence, which can make investing easier. Home equity is the difference between the value of your home and how much you owe on your mortgage. A portion of your home equity can be taken out as a loan and used towards the down payment for your investment property. Your mortgage agent will help you determine if this is an option for you.
Step 3: Speak with a Seasoned Investor
Speaking with an experienced investor can provide you with knowledge and insight. This will allow you to learn more about the realities of investing and give you a chance to ask any questions. A seasoned investor will have an abundance of investment knowledge and be able to provide you with advice, whether you are looking to start or expand your investment portfolio. This can put you ahead of the game and even save you from financial losses.
Step 4: Work with a Realtor
Investing in real estate can be overwhelming and complicated, especially if you are new to the process. Therefore, it is a good idea to seek help from an expert in the industry. Many Realtors invest in real estate themselves and know the local market, so they will be a great asset. They will assist you in finding the right property that matches your investing goals and financial abilities. In addition, your Realtor can assist you in assembling a trusted team of home-buying professionals (mortgage professional, lawyer, home inspector, etc.) that you will need throughout the process. Click here to see what we can do for you.
Step 5: Become Familiar with the Market
Understanding the current market is one of the most important pieces when deciding if now is a good time to invest in real estate. You will want to get to know the current market, history, trends, and any expected changes. Real estate is a cyclical industry, so becoming familiar with historical data alongside current trends will allow you to see what may be expected. Your Realtor will be another helpful resource for helping you navigate the current market, as they can provide you with the most recent data. They will also be in tune with any expected changes or downturns in the market. Click here to view Kingston Real Estate Market updates brought to you by our team leader, Jordan Quaresma.
Step 6: Get to Know Your Target Audience
What demographic are you hoping to attract to your rental property? This will play an essential role in the location and type of property you decide to purchase. For example, students will look for properties that are within close proximity to their school and downtown. They also tend to look for properties that will allow them to live with multiple other people to save costs. Families tend to look for a property with two or more bedrooms, an outdoor area, parking space and in a family-friendly neighbourhood. The latter generally tend to be more stable tenants and rent for extended periods. Consider what type of tenants you want and get to know their lifestyle to get an idea of what kind of property and location your preferred demographic would want.
Step 7: Find the Right Location
Once you determine your target audience and evaluate their lifestyle, you will be able to narrow your search down to specific neighbourhoods. Overall, Kingston is a great city to invest in real estate because it is more affordable than the larger surrounding cities and has a more accessible entry point.
Step 8: Find the Right Property
After determining your target audience and narrowing down your desired location, it is time to find your next investment property. Use the information learned about your audience to help you find a desirable spot for them. Your Realtor will be a great asset in your home search; they will use the information you provided to help you narrow down neighbourhoods and find the perfect spot!
Once you have reached this step, you may wonder, what now? Check out Steps 5-9 in our Home Buyer Guide.
Investing in real estate is a great way to put your money to work for you, but it requires careful planning and research. It may seem daunting; however, following the steps in our guide for beginners can set you up for success. Start by determining your goals and building a team of experts with the knowledge and skills necessary to ensure success. It is also important to consider which investing strategy works best for you and your circumstances. Click here for Investing in Real Estate: Three Common Strategies. With the right team behind you, you’ll be able to find the perfect property that will help you reach your goals.
Contact us today for more information about our services and how we can help guide you through this exciting undertaking!