Thanks to record foreclosures and plunging home values, the memory of the recent recession undoubtedly looms very large for many Americans. As understandable as this is, people can nevertheless find solace in the fact that the real estate market has made something of a remarkable recovery over the last few years.
Indeed, the demand for residential homes has grown to be so great as of late that many people are now actively debating whether to try their hand at investing in real estate.
While the thought of entering this high-stakes, fast-paced -- and potentially lucrative -- world can be truly exhilarating, experts indicate that those actively considering taking the plunge into buying and rehabbing a home to flip or rent must proceed with the necessary caution.
To that end, they offer some basic tips for novice real estate investors:
- Decide whether you want to flip or rent at the outset, and once this decision is made, crunch the numbers so you know the monetary threshold at which the investment crosses from good to bad.
- Be certain to establish a firm deadline for getting the home back on the market or available for rent.
- Resist the urge to make a big purchase your first time out, as it will give you a little more breathing room and time to learn how things work.
- Consider purchasing property outside of the so-called "hot areas," as the competition -- including more experienced investors -- won't be nearly as fierce.
- Always perform the necessary research, always expand your professional network and always perform an inspection on the property.
Another important consideration for novice real estate investors is making sure that their interests are protected and that there are no surprises at the closing. To that end, they may consider retaining the services of an experienced legal professional who can review all documents, answer any questions and help ensure everything proceeds accordingly.