If you are a Millennial or from Generation Z chances are you have started to make a decent income and have thought about investing, but you’re probably not sure where to start.
If that’s the case, investing in real estate is often a wise choice and a good place to begin.
In fact, a recent report found 55 percent of Millennials said they were interested in real estate investing.
While there are plenty of reasons why more and more Millennials are investing in real estate, one of the major reasons is because owning a rental property can generate a substantial amount of passive income on a monthly basis.
But before you decide whether investing in real estate is right for you, there are four things you need to learn before you jump in with both feet.
Determine your real estate investment strategy
Whether you are a seasoned investor, or this is your first time investing in real estate it’s important to first figure out your real estate investment strategy. Having a well thought out strategy will help you determine where you want to purchase properties, what types of properties you want to purchase and how much you want to spend on each property. It will also help you determine if you can/want to go it alone or if you want to explore a real estate investment partnership.
Determine your financial strategy
Once you’ve nailed down your real estate investment strategy the next step is to determine your financial strategy. To do this you will need to look at your financial situation and visit a bank or a mortgage lender for a pre-mortgage approval. To do this, the mortgage lender will ask for your personal financial information, including your income, debt and assets. Based on your information, the lender will give you a tentative assessment as to how much they’d be willing to lend you toward purchasing an investment property.
Identify a strong real estate market
While this might seem obvious, when it comes to finally deciding to invest in real estate it’s important to do your homework and make sure the property you purchase is located in a strong real estate market.
This means you should seriously consider buying an investment property in an area that has steady job growth and a growing population. For example, if there is a new office building or a large commercial business moving into the neighbourhood, this is a good sign that there will be lots of good paying jobs. New residential development is also a good sign that the population in the area is growing, which will mean people will be looking for more rental units. You should also take into consideration the area’s rental demand because this is usually indicative of a strong real estate market.
Talk to an experienced investor
Before you decide to invest in real estate the best thing you can do is to talk to an experienced real estate investor. Not only do they have the experience and expertise, they can also provide you with the resources you need to help you make an informed decision about investing in real estate.
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