3033: 6 Tips for Diving into Property Investments by Elizabeth with The Budget Mom

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[00:00:26] Are you thinking of investing in property? Investing in residential or commercial real estate can be very rewarding. Plus, you can get significant returns in the years to come if you invest wisely. Sounds good, doesn't it? However, it's no game and you need to thoroughly understand the market. Stay informed and have your finances in check before you dive straight into it. Here are five lessons that I've learned working in property investments.

[00:00:55] 1. Ensure You Have Adequate Finances Before jumping headfirst into property investments, you need to take a look at your finances. Make a note of your expenses, income, and even assets so that you know exactly what you have and what changes you need to make to have enough capital. Plenty of successful property investors save up money as they build up a strong portfolio and invest in properties as the years go by. Plenty of risk is not going to be able to pay.

[00:01:25] You also need to be able to understand your tolerance for risk. One risk includes not being able to get your money out of the investment so quickly because property tends to take a long time to sell. The second is the time and money spent on maintaining and managing your property. And the third is the chance of your property depreciating, which would lead to you losing out on capital gains. Assess the risks involved and figure out if you're willing to take them.

[00:01:55] Determine whether you will invest in property with your own money or take out a loan. If you have a good credit history, taking out a loan may be easier for you. Having adequate finances will give you more freedom and confidence to invest in property successfully. Start with Residential Properties Residential properties are appealing to many investors because they tend to be easier to buy, maintain, and manage compared to other types of properties.

[00:02:25] Plus, residential properties deliver monthly rental income as well as capital gains. To achieve capital gains, you could find residential properties in locations where you think prices could increase or buy houses below their market value. If you own your home, you most likely already have experience in finding and buying a house. However, one thing you must always remember is that you're buying the home for others to live in and not yourself.

[00:02:54] One mistake I made with one of my first investments was letting my heart rule my decisions. I was in love with the intricately designed garden in the front lawn of a cute cottage. It turns out most people want clean and easy. It took much longer for the little house to sell, and it sat on the market for longer than any of my investments. It's understandable if you're buying a home for yourself to live in as it should be tailored to your taste.

[00:03:22] However, when investing in property, it's something that should be avoided at all costs. Use more logic and less emotion as you'll be more likely to find the house that's right for business. Gather a team of professionals. Getting started in property investing is an awful lot of work, and if it's your first time, you're definitely going to need some support, because handling everything yourself could be very stressful.

[00:03:49] As a first time investor, you may need the professional assistance of a solicitor to help you with all the legal aspects of buying and investing in property, such as licenses and contractual agreements. An accountant may make bookkeeping easier and help you sort out taxes, while a financial advisor can help you achieve long and short term goals. Having a plan.

[00:04:15] Having a bit of a strategy can give you a clear sense of direction and let you see how you're progressing. Good plans will generally involve your goals and ways you can reach them, as well as strategies for risk management and government concessions that would be beneficial to you. It can also include a budget for short and long term necessities and goals that require funding. Having a plan can help you stay on track and reach your property investing goals quicker.

[00:04:45] Stay informed. Having a good idea of the market can help you make better investment choices. Trends change all the time, and it could impact your investments. So it's important to be able to predict and forecast changes in the industry. Part of being well informed includes staying safe. So this means avoiding pesky get-rich-quick schemes because they usually turn out to be a waste of time and money in the end.

[00:05:12] But be aware of property peddlers who claim to be able to give you huge returns overnight. People like that always turn out to be scam artists. Start with residential properties. Investing in property has turned out to be a great venture for many people. Ensuring you have enough finances to cover the costs of buying, maintaining and managing a property,

[00:05:37] along with keeping informed on the latest news in the industry, will increase your chances of being successful in investing. You just listened to the post titled, Six Tips for Diving into Property Investments by Elizabeth with TheBudgetMom.com Did you know that only 8% of people will stick with their New Year's resolutions all year long?

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[00:08:18] Investing in real estate tends to be a fast track to financial independence, but it does come with more risk and more work than passively investing in low-fee total market index funds. Investing in the stock market has a much lower barrier to entry. And so if you're just getting started with investing, I would encourage you to start here.

[00:08:40] Contribute to your tax-advantaged retirement vehicles and get comfortable with investing consistently and paying yourself first. Build up your cash position and make a dent in your retirement savings, and then look to more advanced forms of investing. Again, this is my personal opinion. Many people don't do it this way, but I consider real estate investing as a more advanced type of investment.

[00:09:07] I know quite a bit about money management and investing, and I consider real estate investing beyond the scope of my comfort level right now. As I get more comfortable with different ways to invest, I may reconsider. But right now, my investing strategy consists of passively investing in the stock market and actively investing in my own business.

[00:09:29] If you're going to start investing in real estate, I think it helps to have a really strong cash position as you're bound to make some incorrect assumptions when you're evaluating an investment property. If you play the numbers too close, when the unexpected inevitably occurs, you may not have the funds to navigate it well.

[00:09:52] Most people investing in real estate do it on leverage, or in other words, they're taking on debt or mortgages to buy investment properties. This adds a level of complexity because you need to ensure that your rental income covers the cost of the mortgage, property taxes, and insurance, plus maintenance and vacancies. If you're a new, inexperienced real estate investor, there's a strong likelihood that these costs could be higher than your estimates.

[00:10:19] So a strong cash position can certainly help in this situation. Then your incorrect assumptions become a learning experience rather than a disaster. I'll leave it there for today, and I'll be back tomorrow reading to you where your optimal life awaits. Let me know the audience. You guys, I have to relax. I want one more than A new product by a permit. Each of the new is such a super учa-fatter. Thank you.