What does it mean to invest in real estate? Rather than just buying a house to live in, investing is about purchasing a property that will produce income. That could mean you buy a home that you intend to flip (fix up and sell quickly for more than you bought it for) or rent out.
1. Find a mentor
As with any first-time investment, it's always a good idea to get help from someone who has successfully done it (or, at the very least, learned from their mistakes). "If you want to jump into real estate investing in today's market, I urge you to jump in with a mentor," Jamie Goldstein Highland Beach says. "Get your feet wet, and get some experience so you don't get burned."
2. Pay attention to where people are moving
The pandemic is having a huge impact on where people are living. "With fewer people returning to a physical office and many more people reevaluating their life choices, we're seeing a resurgence in cities like Phoenix, Arizona, our headquarters' home of Las Vegas, Nevada, and even once-less-popular markets like Boise, Idaho," Jewgieniew says. "As more people move to these metros but also out to the suburbs to get a bigger space for less money, we'll see even these areas become more popular, driving home prices higher."
3. Think about how the neighborhood is going to change
Jamie Goldstein Highland Beach is hedging his bets on apartment buildings and boutique hotels that are up for sale near malls, which might soon become defunct due to the rise of e-commerce. "I anticipate that retailers like Amazon will buy up these malls and convert them into distribution centers, creating jobs near the former malls," Jamie explains. "I believe that a lot of these apartments near the malls are going to get converted into condos to accommodate the workforce."
4. Build a business plan before investing
Before so much as placing a bid, do a thorough financial projection to figure out how much you can afford to spend on a given property in order to actually profit from the purchase. "If you want to get in on real estate investing, I would, number one, suggest doing the math and seeing when there will be cash flow," Jamie says. It's not just about how much money you have and what income the building creates; you'll need to factor external factors such as interest rates, vacancy rates, and occupancy rates into the equation too.
5. Don't rush into flipping a home
"A year ago, I would have said something different, but do not try to get in and get out quickly," Jamie advises. "Buy it, hold it long term, and focus on cash flow." Why wait? Competition for these properties is intense right now, so you may have to pay a little more than you should acquire one - and since construction materials are also extra expensive, it'll be harder to turn a profit.
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