Real Estate Investment | 3 Actionable Tips Before Investing in Real Estate
Making an investment in a real estate property is perhaps one of the biggest financial decisions you're ever going to make. So you'll want to ensure that you're making the right choice without room for any 'expensive' errors –– especially with the national median price of property costing a whopping $571,500. To make smart investment decisions, you'll need to lay a proper foundation to plan your strategy. Here are some actionable tips before investing in real estate properties.
Evaluate current expenses to determine what you can afford
This is extremely simple to undertake. List down your monthly expenses, including your utility bills, Internet bills, entertainment bills, existing loan repayments, credit card debts, groceries and everything else you spend money on. Arming yourself with this information of your expenses will allow you to arrive at a price that you can finally afford to pay for a real estate property. This way you won't take on more debt than you can handle. The savings you accrue after all your expenses can be utilised towards a new loan that's within your budget. A smart mortgage broker can help you determine how much you can afford after assessing your situation. Ideally, all loan repayments shouldn't cross 30 percent of your gross salary, so you don't end up overextending yourself.
Understand the chances you should and shouldn't take
When deciding on a real estate investment strategy, you must be prepared to take certain risks –– but the level of chances you can take will depend on several factors. For example, people closer to retirement age don't want to take any big risks because they don't have many years left to fix slip-ups. Similarly, people with low savings may not want to take as big a risk as people who already have substantial savings stashed away. Some people may take an extra job on weekends to be able to supplement their dream of making an investment in a real estate property.
Set a realistic timeframe to achieve your goal
Simply having a goal to buy a real estate property puts you in the same category as millions of others. If you want to make your dream happen, you have to set a realistic timeframe to achieve each element of your goal. For example, if you've set aside your budget, you need to prepare a timeframe for house inspections, applying for a home loan, making an offer on a property, finalising the offer and taking possession. Setting realistic timeframe-oriented goals will give you the nudge you need to move in the direction you desire, taking you one step closer to becoming a landlord/homeowner.
Investing in the real estate market can be expensive, so use these actionable tips to your advantage and become a smart investor.