Top 10 Real Estate Investing Tips for First Time Investors
Owning a house is a dream come true, being one of the profitable investments of all time, it’s fair enough to say that owning a home is always our number one priority. Real estate has been growing steadily and it’s estimated that it would contribute to nearly 14% of GDP by 2025. The fact that the real estate market has always been on a steady rise, it’s good to always invest in them and expect a greater return in the future too.
For the first time investors, it’s hard to crack the dos and don’ts before buying a dream house of their own. It’s hard to lay down the foundation if there is no proper research behind it. The important key points to remember if you are fresh to this domain are as follows-
Real Estate Investing Tips for First Time Investors
1. Saving for a down payment
The down payment is the part of the money that goes from your pocket, an initial transaction that takes place before buying. The traditional down payment is set to nearly 20% but there are innumerable options and can be chosen according to the buyer’s wish. The important thing to remember is that lesser down payment means a higher cost of paying and also paying for mortgage insurance. Lesser the mortgage insurance, the heftier and pressurized the paying options become.
There are different down payment options like VA loans, FHA loans and conventional loans which offer the best down payment options for first time home buyers. Explore different options and choose one wisely.
2. Hire a trustable real estate agent
Working closely with a trustable agent helps a lot in gaining better insights into the real estate business, the ideal person should be knowledgeable and skilled in the field. The best advantage of having a real estate agent is that negotiation becomes easy and the entire process of buying the house gets easy. Another important point is that they inform about all the technicalities and discrepancies you might face while buying a house. He or she can help you close the loan deal at the end of the day which would ease up the entire process of buying a house.
3. Picking the right neighbourhood
This is a key factor because a good neighbourhood also makes a huge difference in the quality of life that you live. Scout the neighbourhood of the home you are determined to buy before having the temptation of buying it. Always look for amenities that are available within the proximity which is very beneficial for families as well as kids. Always research the place thoroughly and make sure to check the property from top to bottom. Map for all nearest hospitals, shopping malls, schools and other essential amenities before buying a home.
4. Not going beyond the budget
Search houses that lie below your budget scale so that you could save a certain amount of money for later purposes. This helps you save a huge amount of trouble your house might face later like the broken dishwasher or leaking pipes or accidental cracks in walls. It’s better to have a reserve of money so that you can compensate for the losses that might happen in the later stages of buying the house. It’s always good to be cautious and proactive!
5. Better to get a preapproval letter before indulging in buying the house
Talking about precautions, it’s always better to get a preapproval letter of the property which allows you to know how much the lender is willing to lend based on the personal factors like income and debts. This also helps you get a better insight of how much the lender is willing to give the property and also gives you an added advantage of bargaining the property if you change the lender
6. Always compare different mortgages
Comparing mortgages always has its perks, it’s the best tool to know the market scenario and compare the different type of mortgages that are offered for the same property you are looking for. This reduces the excessive money that the lenders’ post and also helps you save money. Scan the market and know everything to be aware of the market.
7. Start fresh
It’s better to start a venture with no leftovers, the same ideology is applied for first-time investments in real estate. It’s better to invest in a house with no debts because that would take off the mental pressure in the later stages. Owning a home makes you liable to pay all the maintenance costs, mortgages and a lot of other necessary costs that add up later. It is essential to stay debt-free.
8. The affordability check
Before even getting knee-deep into something, know how much risk are you willing to take. Before investing in real estate, make sure to know how much are you willing to afford and how much risks are you willing to take. Setting up a specific amount with little downside risk is what is always recommended.
9. Pay attention to the high-interest rates
2020 is a year where the cost of borrowing money might be cheaper but the rate of interest will be higher than the traditional mortgage interest rate which might just chew off your mortgage at a higher rate. It’s better to have low mortgage rates in this case.
10. Give open houses a try
After closing down on your neighbourhood, it’s time you start giving open houses some attention, these houses are up for sale and aren’t in your budget helps you assess the entire place. It gives you a basic idea of how your neighbourhood works. It is best to buy affordable houses in the best neighbourhood.
These are the key aspects according to which you might scout for homes if you are new to this game. These points may differ according to different buying scenarios but planning and organising all the activities before buying your dream house is more essential. Plan and execute accordingly. It’s always good to look for the downsides too, the downfalls that might arise if you are a first time home buyer would be poor negotiation and not having a background check.