Did you know that more than 1/3 of Americans currently have a side hustle to make extra money? If you’re looking for a way to supplement your income, buying real estate is a great way to do it. However, getting started with real estate investments can be overwhelming. 

How do you know what to buy? What is considered to be a good investment vs a bad one? How can you make sure you’re smart with your money? You’ve come to the right place for help. 

Continue reading to learn our best tips for investing in real estate so you can learn how to make a lucrative passive income. 

1. Do Your Research About Neighborhoods

The first thing you need to do is be strategic about where you buy properties. That starts by researching emerging neighborhoods to figure out which areas offer the most growth potential. Additionally, some areas may offer tax incentives for buyers, which you’ll want to keep in mind as well. It’s best to do some online research about real estate trends so you can feel confident when you go to buy.

Buying in the right neighborhood will help you maximize your profits, so it’s vital that you don’t skip this step!

2. Don’t Limit Yourself to One Region

When you’re first figuring out the best ways to invest in real estate, it’s natural to stick to what you know. When you’re doing your neighborhood research, you’ll likely start by learning more about the areas around you. And honestly, there’s nothing wrong with that!

However, you don’t want to only limit yourself to buying properties in one area. If you don’t look for investment opportunities outside your own geographical region, you’re only limiting yourself. Think of it in terms of diversification. If you were investing in the stock market, you wouldn’t invest in only one type of stock, right? Similarly, you should look for investment properties in multiple areas.

3. Learn From Other Investors

One of the best ways to learn investing tips is by learning from other like-minded real estate investors. Consider joining real estate investing networking groups to find people to connect with and learn from. Oftentimes, these groups will also have events covering different topics that can help you learn more about how to be successful in the industry. 

You may even try to find a mentor through one of these groups, to help you get more one-on-one guidance from someone who’s been in your shoes. 

4. Set a Budget and a Timeline for Each Investment

Once you decide on a property to buy, it’s helpful to determine a budget that you plan to spend when getting it ready to rent it out. You’ll also want to set a timeline for how long you think it will take to get it ready. 

This can help keep you on track, so you go into your purchase with a plan in place. However, realistically, keep in mind that it’s not at all uncommon to go over budget when preparing a property for rental. And, it’s just as common for things to take longer than you expect as well. Use your budget and timeline more as guidance rather than a strict rule and always expect the unexpected. 

5. Plan for Vacancies

In an ideal world, all of your real estate investment properties would be rented out 100% of the time. Unfortunately, that’s not always the case. When you’re making your plan for investments, you need to account for an expected rate of vacancies, so you aren’t unprepared for a lower rate of revenue. 

The percentage of vacancies you should plan for will vary on a number of different factors, such as where your properties are located, how many properties you have, etc. Take some time to do research on the percentage of vacancies you should plan for so you’re better prepared. 

6. Learn the Ins and Outs of Tax Laws

When you become a real estate investor, it’s more important than ever that you’re very familiar with tax laws federally and at the state level. You need to learn how to file for the right deductions based on your city, county, and state. If you don’t feel comfortable learning about this yourself, then it’s best to schedule a meeting with a tax professional who can help you fill in the gaps. 

7. Take Care of Maintenance Issues Quickly

When you’re getting into real estate investments, it’s natural to focus on the properties, but you also have to think about the tenants. As the property owner, you’re the one who will be responsible for maintenance issues that arise and it’s important that you take care of them quickly. 

You can help eliminate some issues by writing your lease so that it includes bi-annual walkthroughs to help you find potential issues before they get more serious. You can use this time to do thorough inspections on a regular schedule, which can help keep tenants happy and save you money. 

8. Consider Hiring a Property Manager

The simple fact is that you might be interested in real estate investing but have no interest in the day-to-day tasks of managing properties. In that case, it could be well worth the money to hire a property manager or a full-service property management company to take care of those tasks for you. 

While you’ll be spending more money on management fees, it will free up your time to invest in more properties, so you’ll likely still come out on top. 

Remember These Tips for Investing in Real Estate

Now that you’ve read through these tips for investing in real estate, you should have a better idea of whether it’s the right choice for you. It could be just the thing you need to explore to help you earn passive income. 

Would you like to read more like this? Check out our other business articles today.

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By SARAH