Learning how to invest in real estate for the first time can be a tricky business. Between learning the ropes of the industry and studying local trends, there’s a lot to take on. It can be especially difficult in places like Kirkland and the greater Seattle area where the real estate market has been changing dramatically.
Need some help mastering the real estate basics and deciding on your first investment? Here are some localized tips that will help you make the best decisions, both financially and logically.
1. Choose the Best Real Estate Investment Option
This sounds like a no brainer, right? Of course, you want to choose the best real estate investments. However, what many first-time real estate investors don’t realize is that the best kind of real estate to buy can vary from place to place, depending on local trends and the current economy.
Most of the time, when you’re learning how to start investing in real estate, the first thing you’ll need to do is figure out how to evaluate risk. You’ll want to choose a property that can improve in value. Whether you’re planning to fix it up yourself or simply hoping the area will increase in popularity, you need to have a solid idea of how much the property’s value might improve over time.
Your first investment isn’t the time to make a risky, out-of-the-box choice. Go with something common, like a home, a vacation house, or maybe a rental property. These kinds of properties are typically low-risk and budget-friendly.
When it comes to the best property investment tips in Kirkland, pay attention to where home prices are steadily increasing. Additionally, monitor which kinds of houses seem to be increasing in worth consistently. Maps like the one below from Trulia can help you determine which areas of Kirkland have the highest selling points for homes (and where you’re the most likely to make a profit off your investment).
Image Source: Trulia
Although there isn’t one “right” kind of real estate to invest in for the first time, you certainly need to pay attention to the Kirkland property market if you want to choose one that will have a high chance of increasing in value.
2. Define Your Real Estate Investment Goal
Again, this tip might seem like a no brainer. You’re probably thinking, “duh, to make money and increase my value over time.”
When learning how to be a real estate investor, especially a successful one, it’s vital that you understand what your BIG goal is. It needs to be more specific than just making money, and it should have measurable, achievable steps.
Need help determining what your real estate goal is? Ask yourself the following questions.
1. How many properties do I want to invest in? Why?
2. What kinds of properties do I want to select? Why?
3. Will this be a long-term or a short-term investment strategy?
4. What is a measurable goal I want to reach? For instance, am I aiming for a 10 percent return on my investment? Or a monthly income of $1,000?
5. When will I achieve this goal by?
Although some people equate investing in real estate to gambling, there’s actually a great deal of purpose and planning that goes into your decision, even if it’s your first time. Before you make any property investment, take time to think about your personal goals for the investment and how you will achieve them with the property you’re considering.
3. Check Your Credit Score
Wondering what your personal credit score has to do with real estate investing?
Many people are surprised to realize that their credit score actually has a huge impact on the loan they are able to receive. Only about 30 percent of Americans are mortgage-free at this point. Unless you have a big lump of cash sitting on the side, you’ll likely need to finance your first real estate investment, regardless of the property type.
Your credit score falls somewhere between 850 and 300. Here’s how you can interpret how potential lenders will view your score based on its ranking.
- Bad Credit: 300 – 600
- Poor Credit: 600 – 649
- Fair Credit: 650 – 699
- Good Credit: 700 – 749
- Excellent Credit: 750 – 850
If you have a bad or poor credit score, there are other ways you can still obtain financing to purchase a real estate investment. However, most people will try to improve their credit scores before investing so that they can score a great mortgage rate and better agreement terms.
4. Talk With Local Property Investors and Real Estate Agents
As we said before, it’s important to understand how any property investment advice applies specifically to your area. Investing in commercial real estate for beginners, or in residential properties, could be a completely different ballgame in Kirkland than anywhere else in the country.
That’s why we strongly recommend speaking with experts who know how to invest in real estate and what the local trends are. Don’t rush into any investments before learning as much as you can about Kirkland or your respective community. Making a smart investment is all about research, patience, timing, and knowledge.
5. Find Multiple Sources for Buying Properties
When you invest your retirement funds, you likely try to diversify your portfolio for the lowest amount of risk and widest coverage of possible profits. Similarly, one of our real estate tips for beginners is to avoid putting all of your eggs in one basket.
Investing in a rental property for beginners is a smart way to diversify your investment without managing too many different properties at once. By investing in real estate rentals, you could potentially receive income from multiple tenants, which is less risky than flipping one house and attempting to sell it for a profit.
6. Find a Good Realtor to Locate Properties
During your first stage of learning how to get into real estate investing, you need all of the help you can get to make the best decision. Here in Kirkland, we highly recommend using a realtor to find the best properties within your budget. A trained real estate agent will know what areas are booming, where the newest properties are, and which homes are risky to invest in.
Whether you’re interested in a real estate rental property investment or purchasing your first house, it’s always a smart idea to ask for help from experts. Real estate investing for beginners is no picnic, but with a bit of advice from local realtors, you can make the best decision for your circumstances.
We hope this piece has given you a great starting platform for investing in real estate for beginners. Although it will take time to learn about the ins and outs of investing in properties, the important things to know are that:
- It’s smart to ask for help and advice from local experts.
- You can have multiple kinds of property investments at once.
- Forming goals is essential to creating a successful investment strategy.
- Your credit score can have an impact on how you finance your first investment.
Currently, Kirkland and other nearby areas in Washington are poised for some big changes in the real estate industry. Keep an eye out for great investment opportunities, but be patient and wait until the perfect property becomes available. Rushing into things voids all of the tips we just shared, and in the end, biding your time is a better financial move.
Davis Property Management
At Davis Property Management, we provide fast, friendly, and professional service tailored to your individual property management needs.