How to Become a Property Investor
One of the more lucrative opportunities in the U.S. is property investment, which has the potential to turn a large profit; the high-risk investing, however, is not without its dangerous pitfalls. To become a successful property investor, you'll need to make educated, albeit risky investments. Donald Trump, for example, procured his estimated $3 billion net worth through a series of large apartment complexes and hotels, which easily could have put him into poverty rather than affluence.
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Instructions
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Determine an investment strategy. Various types of investment properties exist, such as apartment buildings, commercial real estate and undeveloped land. Depending on the role you want to play -- landlord, property flipper or basic reseller -- you need to choose a property investment accordingly.
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Familiarize yourself with industry notables who can give you advice. Fronting the capital for a joint investment with an experienced property investor can garner you experience as well as profit. You can also find a reliable real estate agent to build a long-term relationship with and give you the inside scoop on new listings.
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Consult mortgage lenders and financial planners to determine whether you have enough assets to tide you over when your investments are not doing well; for example, when and if your rental property sits vacant for months. Mortgage lenders and financial planners can give you an idea of how much money you need to keep on hand for emergency purposes.
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Calculate your assets to determine how much money you have for your initial investment properties, taking into account the reserve funds you need to maintain. If you have some equity in your principal residence, you may be able to obtain a loan against it to use it as investment capital.
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Evaluate any investment opportunity that comes along carefully. You need to think about why a property is a viable choice before you decide to make the purchase. Examine the rental yield, property value, whether you can add value to the property, how much similar properties sell for and the vacancy rate of rental properties in the area.
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Purchase a property only if it meets your criteria after you conduct the proper analysis. Renovate or redecorate the property if necessary and place it on the market for rent or for sale.
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Build relationships with professionals who can help you solve problems with your properties. These include tradesmen for repairs and maintenance, a lawyer, a property manager for issues with tenants and an accountant for tax purposes.
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Tips & Warnings
If you have a rollover individual retirement account, or IRA, you may be able to use it towards the tax-deferred purchase and investment of property. You will not, however, see the profit until you begin taking out payments at 59 and 6 months of age. If you choose to take out money before, you will receive a 10 percent penalty on top of the mandatory tax.
If your interests lay in flipping homes, you may want to get your real estate license to avoid finder and broker fees.
Property investment is a high-risk gamble. Never use funds allotted for necessary expenses, such as your family's household budget, your child's college fund or medical emergency account for property investment.
References
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