According to the Colorado Association of Realtors, inventory in Denver is up by 60% this year, providing a much-needed breather for the industry. This is welcome news for real estate investors looking to scoop up properties in the city.
Investing in real estate is an excellent way to earn passive income. It also helps address the current nationwide shortage of rental homes.
It's not without its risks, though. Keep reading for the top three tips every real estate investor should know.
1. Study the Real Estate Market
It's vital to understand the current market when you invest in real estate. This will help you evaluate a property in line with typical home values and expected rental income.
Pay close attention to ways you can renovate a well-priced property so it appeals to potential renters. For instance, you should never reduce the number of bedrooms in a family-friendly area or install a pool where people prefer yard space.
Study the local markets so you can better anticipate where values are rising. You will often find better deals in up-and-coming neighborhoods rather than established hot markets.
Look for neighborhoods with the following qualities if you want to attract long-term tenants:
- Good schools
- A low crime rate
- Green spaces
- Leisure activities
- Medical facilities
- Public transportation
- Shopping malls
- Excellent walkability
Taking the time to learn more about your market will help you achieve success with real estate investing.
2. Know the Costs Involved
Don't get caught up in the idea of abundant passive income. Apart from your mortgage, there are a few other costs to consider when you invest in real estate.
These include:
- Closing costs
- Property taxes
- Maintenance costs
- Repairs and upgrades
- Marketing your property to renters
- Insurance
DIY work can detract from the value of your property, so don't think you can save a few pennies by maintaining your property on your own.
You must maintain your building according to Denver's building code and ensure qualified contractors carry out electrical, HVAC, and plumbing work.
3. Compile a Business Plan
Treat your real estate investments like a business. It's the best way to ensure profits and minimize risks.
Set up a solid plan to keep you focused and on track. Include detailed information about your rental income, expenses, and property value.
You should keep track of this information with a view to your long-term goals and future investments. Make a note of any significant changes to the market that could affect your real estate investment plans.
A business plan helps you focus on the big picture rather than dwelling on any setbacks.
How to Thrive as a Real Estate Investor
Overall, the best thing a real estate investor can do is enlist expert help with managing their tenants and maintaining their properties. Unless you're a seasoned pro, juggling the balance between expenses and income can be a challenge.
You may also experience difficulties attracting good tenants, keeping them, marketing your property, and collecting rent.
Get in touch with Laureate Ltd Property Management Services for assistance with these aspects and more.
