When
you think about real estate investing, the first thing that comes to your mind
is owning a property. Rules are some set of laws that are set to guide or govern
someone when thinking to invest in real estate. Real estate has become one of
the most developed industries in Kenya hence leading to one of the best
businesses that one can invest in.
Rules
are always to direct one on various ways of becoming successful in real estate
investment. You should learn a lot of rules for you to safely profit from real
estate investing in this economy. Investing in real estate is a popular choice
for good reason. Below are some discussed rules to guide you in real estate investing.
1. Educate
Yourself
It
is well known that education is always the key to success therefore, no success
can come without education or hard work, and more. Educating yourself is more
important when dealing with any business because it will help you learn and
understand more about your business, how to deal with clients or tenants the
management system, and more.
Knowledge
applies everywhere when doing anything more so when handling big business such
as real estate. Whether you are talking about equities and the stock market or
any other thing. You need to be professionally educated to succeed in your
career. It is also important to have financial education because, this will
help you know how to handle money, knowing about assets, understanding income
and all the expenses in the business.
2. Making
of Long-Term Investment
A
temporary hike in the market can make you invest in real estate for the short
term, but every seasoned investor knows that real estate investments are made
in lo terms of appreciation value in mind. You need to study the real
estate market and figure out where investing makes the most sense and invest
accordingly.
You
have to consider the cash flow and appreciation potential of any real estate
venture before coming to conclusion.
3. Consider
Outsourcing Property Management
After
having your property whether rented or bought you need to consider management
where you can either manage your portfolio or rent it for a certain firm to do
it. A good number of investors will always allow one to do it because this
delegates the task of rent collection and property maintenance to the third
party and the investor is left with more time to expand further their
portfolio.
There
are traits that a good landlord must have in order to retain good tenants and
the small efforts have always kept the tenants happy. Handling property issues
or complaints as well as finding the right tenants is left for a professional
property manager.
4. Setting
a clear investment strategy
Being
a real estate investor is a smart way of being financially independent. This
will only happen when you take a businesslike approach to it. When starting a
business, you set a business strategy with very well-defined goals. One needs
to be very realistic on both investments and revenues.
Before
investing in a property, look at the numbers carefully, and analyze the returns
it needs to generate for you. If you are in long-term business you need to
set a multi-annual strategy.
5. Invest
for Cash Flow
Cash
flow is the glue that sticks the investment together. It covers all operating
expenses and debt. Having a positive cash flow enables you to acquire more
properties faster, get greater Tt
One
needs a solid conservative plan to stabilize the property and make its cash
flow positive.
6. Take
a Top-Down Approach
Always
start by selecting the best market that aligns with the type of investment that
you have. When one considers what is in the market then that's a good
investment. Using a top-down approach means looking at the state, the city the
neighborhood, the local economy and then the job market, the demographics of
the population the growth rate in the area, and the unemployment rate. All
these are factors of a good real estate investment decision.
7. Leverage
your investment Capital
Real
estate is the only investment where you can borrow other people's money to
purchase and control the income-producing property. It is a good thing because
it makes you leverage your investment capital into more property than
purchasing using all cash.
On
top of that, you can borrow money from banks and any lending institution at
closed to historically low interest rates. With that, you are able to control a
lot of real estate with a relatively small amount of down payment capital.
Leverage magnifies your overall rates of returns and therefore accelerates your
wealth creation.
8. Know
the Basics
It
is possible for anyone in business to invest money in real estate, Uninformed
investments too often become dismal failures. To mitigate risk and give
yourself the best chance of success. You need to learn the basics of real
estate investment. For example, how you will determine whether a property will
be profitable? How will you screen your tenants? And what strategy do you need
to exit the environment?
In
a nutshell, you need to know that real estate investing offers the
opportunity to control your own destiny. You need to be observant and study the
market in-depth before making a decision of investing in a particular property.
Study the local trends as they might differ from the average expectations for
the market.
Make
sure to have a diversified portfolio so you don't go bankrupt if one fails.
Ensure there is a flow of cash so that you can continue building your
investment business.
