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The Basics of Investing in Real Estate

Agents Working with a real estate professional

There’s a lot more to investing in real estate than buying a property and waiting for its value to appreciate. You need to put a lot of work into making sure an investment property becomes and stays profitable.

For an investment to prove lucrative, you need to learn the fundamentals first. Here’s what you need to know about investing in real estate:

Every market is different

The secret to a successful real estate investment is knowing the market. Each local market follows its own trends. Conduct a real estate market analysis to get a better idea of average property prices and future real estate trends in the specific area you’re eyeing.

An investment property analysis is also crucial to forming a realistic business plan. You’ll need to figure out the estimated returns on your investment, appreciation and depreciation rates, interest, and the like.

Location is key

Location is one of the most important aspects to consider, so take your time choosing where to buy your property. A lot can be done to improve on your property, but its location is unfortunately not one of the things you do anything about. A well-situated investment can, on the other hand, be a motherlode.

Before you even think of buying, research the area thoroughly. Be sure to find out, for instance, whether there are any future developments that could affect the profitability of your property.

Types of properties

When investing in real estate, pick out a property that is in line with your financial goals. Here are the different types of investment properties:

  • Office – This type of property is used to house offices and business headquarters. It is categorized as urban or suburban office properties and separated into Class A, B, and C, ranging from the most to the least desirable.
  • Retail – This includes shopping malls, restaurants, and the like. Depending on the size of the property, this can be a single or multi-tenant property.
  • Multi-family – This includes apartments, condos, and townhomes. As with office properties, this type of property is classified into Class A, B, and C.
  • Industrial – Used for manufacturing or storing goods and typically found along transportation routes. Its subcategories are heavy manufacturing, light assembly, bulk warehouse, and flex industrial.
  • Mixed-use – This pertains to a mix of two or more of the property types mentioned above.

Ways to invest in real estate

One of the biggest perks of investing in real estate is its flexibility. Unlike stocks or bonds, real estate offers a variety of investment opportunities. Here are the two most common ways to invest in real estate:

  • Flipping – This means buying a property and making improvements so you can sell it for a better price. This is ideal for those who want to make a quick profit.
  • Renting – Rental property, whether commercial or residential, can generate a consistent cash flow and is the perfect option for those who want something long-term. Keep in mind that this option also means taking on landlord responsibilities.

Working with a real estate professional

Work with a local real estate agent who knows the ins and outs of your target market and who’s equipped with the information to guide you through your investment. With a good realtor’s useful insights and expert advice, you’ll be able to make better, more informed decisions.

Also, having someone who can skillfully handle any problems that may crop up is always bound to be a plus.

Want to invest in South Texas real estate? Get in touch with us at Desert Flower Realty and let’s explore your options today! Call 361.449.2051 or email desertflowerrealty(at)desertflowerrealty(dotted)com.