12 Questions You Should Ask Yourself When It Comes to Investing in Real Estate
More and more people are starting to turn to real estate as a way to earn extra money without doing a lot of extra work. New construction lends itself particularly well to new investors because of the high quality of the homes. You won’t have to worry about things breaking down, and you’ll be able to get the highest prices for the rental units. There’s also a lot of flexibility when it comes to home styles and the level of commitment.
Despite the ease with which you can earn income, real estate investing also requires you to have enough capital upfront. Before you invest in new construction homes, you should ask yourself the following questions.
- How long have you been investing in real estate?
- What is your level of investment experience?
- Do you own your own home?
- Do you own real estate investment property already?
- Are you taking any course about real estate?
- Do you have a support team for investing?
- Have you been approved for financing?
- How much capital do you have to invest, and where is it coming from?
- What kind of property would like to invest in?
- Do you have a goal of how many properties you’d like to own, and if so, how many?
- Do you understand/know the market you want to invest in?
- Are there areas you feel like you need support in?
How long have you been investing in real estate?
If you’ve been investing in real estate for a long time, you probably have a good idea of what you want in your rental units. All you need to do is check out the styles of homes we offer and tour the communities to get started.
Those who are just starting out may appreciate a bit more guidance. We can explain all of your options and help you select properties that will meet your investment goals.
What is your level of investment experience?
Again, experienced investors probably already have a process in place when it comes to selecting properties. We’ll follow your lead.
New construction homes are great options for those who don’t have a lot of experience. There are different styles to choose from, and many of those styles are likely to attract families, which tend to stay in their rental units long-term. You also won’t have to worry about fixing the place up before you can rent it. Everything is ready to go.
Do you own your own home?
A lot of people start their investment journey by renting out an in-law or above-garage suite that’s part of their personal home. If you’ve been thinking about buying a family home for yourself, we can show you how you can include an income suite without adding a lot to your overall costs. Once you have a tenant, you’ll be able to significantly reduce your monthly mortgage payment.
Do you own real estate investment property already?
If so, think carefully about whether you’re looking to diversify your home styles or to stick with what’s already working. Many investors prefer to keep the same style of rental unit because a lot of property management companies specialize in a certain style, and sticking to what you know is a safer choice. However, it’s also exciting to branch out into different styles, and we can offer you the support you need.
Are you taking any course about real estate?
Knowledge is power. If you’re new to investing, it’s smart to take some type of course that will teach you everything you need to know about investing in real estate. It’s a complicated process, and you need to know about your rights and responsibilities, along with all of the financial details, such as how much you’ll need for the down payment and how much you’ll have to set aside for taxes.
Do you have a support team for investing?
Most people prefer to have a competent team working with them. The people you might want on your team include a mortgage professional, a lawyer, and a property management company. Of course, different people have different needs, so build a team that’s right for you.
Have you been approved for financing?
In most cases, you need at least 20 percent of the cost of the property for a down payment. Lenders can also be wary of approving you if you already have several mortgages on different properties. Before you get too far into the sales process, you want to get pre-approved for financing.
How much capital do you have to invest, and where is it coming from?
The more capital you have, the more options you have available. For instance, if you have a lot of available capital, you might be able to invest in an entire row of townhomes. Having several properties close together like this makes them easier to manage. Those with less to invest can still do well by purchasing something like a single-family home with a basement unit. As you earn income from this first property, you could save up those profits to invest in your next property.
What kind of property would like to invest in?
We build detached homes, duplexes, and townhomes. Each has unique advantages when it comes to investing. Think about what type of tenant you’re hoping to attract, and go from there. For instance, townhomes tend to appeal to young professionals and retirees, while detached homes are preferred by families.
Do you have a goal of how many properties you’d like to own, and if so, how many?
You may need to work your way up to meet your goals. Many investors find it best to think about how much they want to earn each month, then work backwards to decide how many properties to invest in. For instance, if you want $10,000 a month in income, and each property could bring in $1,000, you’ll want 10 properties. Don’t forget to factor in your expenses.
Do you understand/know the market you want to invest in?
Local people tend to have an easier time investing in a particular market because they understand the area. They know what types of homes people are looking for and which areas they want to live in. However, you can still invest long distance if you have a team in the area. We can help long-distance investors get set up.
Are there areas you feel like you need support in?
Help is available to those who need it. Whether you need some help with choosing a property, figuring out the financing, or understanding what your responsibilities will be, there’s an experienced professional who can offer advice. All you need to do is ask.
Investing in real estate is easier than you think. If you’ve got the capital for a down payment, you could be well on your way to earning investment income.