The real estate industry is experiencing a meteoric rise. More people are buying homes now than they had over the last four years. Given the strong economy and record low unemployment rates, consumer confidence is up, businesses are making more money and are purchasing more commercial locations.
What does all of this mean for you as a real estate investor?
There has not been a more opportune time in recent years than right now to get your feet wet in real estate and start making money. Whether you’re a newbie to real estate or a seasoned professional, it’s always a good thing to do research and figure out methods, tips, and tricks on how you can make the most out of your investments.
To help push you down your path to financial success, our team of real estate experts has put together this list profit-making real estate tips you should consider with your current and future investments!
1. Location, Location, Location
We are going to open up our list with one of the most often spoken phrases in real estate: location, location, location! Just because those three words are uttered so frequently, doesn’t make them any less important.
When you’re investing in real estate, whether your intention with a property is to flip or rent, you need to be mindful of who your consumer is and how your property’s location serves them.
For example, if you purchase a commercial location with the intention of renting to a business, ask yourself, is your property located in a place that gets foot traffic? If it’s not, your options will be limited to non-consumer facing businesses which will decrease competition and what you can ask for in rent.
The same goes for purchasing rental units in an undesirable area. While there is always somebody out there that your location will work for, understanding who that person is and how much they’ll pay can help you purchase your property at the right price and manage your expectations.
2. Look For Wholesale Prices
When buying investment properties, one of the best real estate tips we can offer is to find properties at incredibly low prices. Seems self-explanatory but there is a catch.
Properties that are priced to move typically need a little TLC.
We are here to tell you that the small fixes and minor renovations you put into a property are well worth your time if the price is right.
3. Understand Taxes
There are tax implications to real estate investing both good and bad.
Be sure to understand what property taxes you’ll be liable for and factor them into your rental rates or sale price. On the positive side of taxes, get familiar with things like depreciation write-offs and other benefits to make sure you don’t overpay Uncle Sam.
4. Keep Your Credit Solid
Unless you’re flush with cash, real estate investing will take borrowing some money. That’s why one of the powerful real estate tips you can leverage to ensure you can borrow money fast and cheap is having awesome credit.
Bad credit means borrowing limited amounts at high interest rates and with steep fees. Those expenses will eat away at your profits.
We recommend rehabbing your credit if it’s poor before diving too deep into real estate investing.
5. Help Your Property Outpace Inflation
An inexperienced real estate investor might buy a property, see that it goes up in value over a year by a few thousand dollars and think they’ve turned a profit. Because of inflation, that profit doesn’t mean as much as it seems.
To make sure that your property grows in value at a pace that exceeds inflation, consider making cost-effective upgrades to it that will pay for themselves multiple times over in increased rent or sale price!
6. Don’t Knock Renting
One of the most common real estate investing avenues new investors go down is flipping homes. While lucrative, flipping homes isn’t for everyone.
For an alternative money-making real estate venture, consider becoming a landlord. Purchase a property then charge in rent just enough to cover your taxes, mortgage, and maintenance expenses.
Once your mortgage is paid off, most of the rent you collect will be profit!
7. Think of Incremental Income Opportunities
Not all of your real estate profits need to come in the way of selling a property or rent. If you own a property in a good location, consider finding creative ways to increase their margins.
For example, if you have a centrally located apartment complex that has a big parking lot, make that lot permit-only and rent out a-la-carte additional spaces to tenants and even people who live elsewhere!
8. Remember the 1% Rule
This is one of the golden real estate tips for soon-to-be landlords. If you’re purchasing a rental property, be sure that what you can charge in rent covers at least 1% of your purchase price each month.
So, if you purchase a rental property at $100,000, ask yourself, “Can I rent this property out for at least $1000 per month?”
If you can, you’ve found an excellent deal!
Wrapping Up Real Estate Tips for Current and Prospective Investors
Whether you’re new to or a veteran in the real estate trade, there is serious money to be made. To claim your piece of the pie, start by taking into consideration the real estate tips we’ve listed above.
With those guiding principals at your back, you’ll significantly boost your chances of making worth-while investments and paving the way to the financially successful future you desire!
Are you looking to buy your first investment property in the Chicago area? Maybe you’re looking to sell an existing property for top dollar? Either way, our #1 ranked Chicago real estate team can help.
At Chicago Real Estate Agents, we’ve been helping investors, business owners, families and more get incredible outcomes for all of their real estate related needs.