subject: Three simple rules for real estate investing [print this page] Three simple rules for real estate investing
If you're thinking about getting started in real estate investing, you need to understand the need for continuing education and long-term thinking. In other words, a newcomer is unlikely to make a ton of money quickly in the real estate business, but those who stick with it have a high chance of success. Even though we can't reduce success in real estate investing to some magic bullet, there are some simple tips to keep in mind that can help you on your way.
Here are three simple rules to help you achieve success in real estate investing.
1. Look for areas under new development
If possible, you want to try to invest in areas which are being developed for the first time or are experiencing considerable redevelopment and investment by the business community. In other words, you would like to be in the path of progress. Ideally, you would like to find real estate investment properties that are located in these emerging areas and have cosmetic flaws but no serious structural problems.
2. Forget the get rich quick schemes
There are those who are able to make money in the short term by flipping real estate properties. However, we prefer to think of real estate as a long-term investment since it can be difficult to make money in the short-term. This is especially true given current market conditions and the high transaction costs.
Moreover, you should definitely stay away from those late-night infomercial products that tell you to buy properties with no money down (and even promise that you can get back money at closing). These properties are extremely difficult to find, and you have to ask yourself what is wrong with the property if the seller is so desperate to sell for no money down.
3. Capital requirements
In order to receive the best mortgage terms, you'll want to put down at least 20% for a down payment. You can sometimes get a mortgage for a smaller down payment, such as 10%, but you'll likely have to pay additional costs. These include a higher interest rate, higher loan origination fees, and the requirement to pay for private mortgage insurance since the lender is risking a greater amount of money.
