Real estate investors have always been known to think with their heads, not their hearts. Yes, their decisions are always calculated and precise. A real estate investor will most likely not be making investment decisions and buying properties without conducting and checking all the logical requirements that follow the sale, whether he/she is investing in residential or commercial real estate.
Let’s imagine a scenario where you, a regular person, are taking a walk or a drive around your neighborhood and you see a “For Sale” sign on one of the houses. If you are anything like real estate investors, you will most likely immediately start thinking of the possibility of buying that property. Any person should ask themselves about the variables that come along buying an investment property, and most importantly: Should I invest in houses for sale near me or shouldn’t?
When it comes to real estate investing, real estate experts know that what works for one investor might not work for another. The key is to assess all the variables that form a good real estate investment decision. To narrow down your focus, we’re going to be exploring residential real estate and in particular houses and how you can capitalize through buying houses in the same area you reside in.
Related: Residential Real Estate Investing: The Best Way to Make Money in Real Estate.
Major questions that real estate investors must ask prior to investing in houses
Should I invest in houses for sale near me if I don’t know if my local housing market is good or bad?
The local housing market can tell you a lot about any potential investment property that you have in mind. Just because you own a current property in a certain area doesn’t mean that you must invest furthermore into it. A lot of real estate investors consider out-of-state real estate investing. Here are a few keys you can use to evaluate your local housing market before making your decision:
- Fluctuations in prices: The healthy rate of price appreciation is estimated to be around 5%.
- Time on market: The number of days that a listing is on the market till an offer is accepted.
- List-to-close ratio: It indicates whether properties are selling for more or less than the listing price.
Knowing these factors can help you assess your local housing market and identify if it’s a seller’s market or a buyer’s market. Take the list-to-close ratio as an example; if properties for sale in the area have a ratio above 100%, it’s an indication that it’s a seller’s market. However, if the ratio is less than 100%, it’s more likely that you’re in a buyer’s market as homeowners are going below their asking price to find a sale for their property.
Should I invest in houses for sale near me if I know nothing about rental properties?
If I were to consider buying houses for sale near me to use as a rental property, what would it entail? Every real estate investor must answer all the questions that come to mind about rental properties prior to taking actions.
Related: How to Make Money in Real Estate: Buy a Rental Property
The following are a few points to know about rental properties:
- Rental income: Rental income can vary from one investment property to another and from one location to another, so make sure you calculate your rental income clearly to include all costs. It’s best to use a rental property calculator for this purpose.
- Rental expenses: There are certain rental expenses that real estate investors must take care of, such as maintenance costs and repairs costs to make sure that your property is in the best condition possible.
- Property taxes: Buying rental properties can increase your property taxes drastically. It depends on the type of property.
- Don’t bite more than you can chew: This translates into buying an investment property that you can control. Assume that you won’t have the property generating a rental income for a while, will you be able to handle the mortgage payments on your own?
- Consider a partnership: Partnerships are a great way to make the best real estate investments. Combining expertise and financials with another real estate investor can protect both of your investments even further.
- Financing the property: Research financing options and find the best one that provides you with the lowest interest rates in the short term and long term. Many beginner real estate investors consider large down payments to rid themselves of the long payment periods that come with mortgages.
Should I buy houses for sale near me if I haven’t conducted a proper market research?
The answer to this question is fairly simple. No, you shouldn’t! Conducting a real estate market analysis is the map to finding the treasure. If you neglect that map, you might end up in a location even further than you began. Meaning that using a real estate market analysis can assure you of the solidity of your real estate investment. Knowing all the metrics that make a great real estate investment is easily attainable through a proper analysis.
Conducting a market research used to be done manually. However, thanks to technology, you can conduct a market research online from the comfort of your own home. Consider using Mashvisor’s rental property calculator and run a comparative market analysis to clarify the real estate comps that are associated with any potential property.
Related: The Real Estate Market Analysis Tools That Every Investor Needs
Should I look for houses for sale near me if I know nothing about real estate?
Knowing nothing about real estate is not a problem. Nowadays you can become an expert on any topic through a simple Google search. Real estate investors can find a vast amount of information on most branches of real estate. There are blogs, forums, websites, books, and even podcasts that go into the details of making successful real estate investments. The more you know about real estate, the more comfortable you will be with future investment decisions.
Related: The Top 10 Advantages of Investing in Real Estate
I don’t know about you, but I would prefer to have all the information laid out before me prior to looking at houses for sale near me. I recommend that before deciding to invest in real estate, you know the benefits of real estate investing and the disadvantages of real estate investing. Know where real estate investors have made mistakes in order to prevent future you from making them.
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