Things to know before you invest in real estate properties

After the housing crash, a lot has changed and improved in the real estate market. As with any financial investments, one must take the necessary time and analyze market trends to really maximize the return on investment (ROI). Before embarking on a real estate venture it’s important to look at the market trends.

The housing market is expected to have a strong year. The period includes 2017 to 2020 and beyond, according to Gordcollins. During this year, analysts and experts estimate that existing home sales will be 6 to 6.5 million units. In addition, there will be 1.3 million new homes being built per month to 2024.

Depending on the part of the country, it’s important to look at the buying trends. Whether it is buying, renting or investing in real estate you must look at your financial resources and see what investments make the most sense.

In the subsequent sections, look at the things to know before buying commercial real estate and things, and investment that produces good returns.

Things to know before buying real estate

The first rule of business is to conduct plenty of research of the market and the available capital at your disposal. The next six aspects discussed are a recommendation from the Business Banking Group.

The first step is making sure you have money set aside to embark on this real estate project. In other words, weigh the pros and cons because only you and your team of people can know if a real estate investment is viable.

The next step is whether to own or to rent. Each has costs associated with it and it also depends on the real estate location. What makes sense is to revise your income and expenses. After analyzing all your financial resources, you will develop a concrete forecast.

The subsequent phase is trying to assemble a team. You may have a professional and a trustworthy friend or an acquaintance. You want to have someone who can see the big picture and assess the team you want to recruit for your real estate endeavor. It will not hurt to consult a broker, certified public accountant, and a lawyer.

When shopping around for an asset like property consider these factors:

– Location

– Allowable uses

– Expansion potential

Choosing a location is about calculating how close the commercial space or office is to customers, employees, manufacturers, vendors, suppliers, etc. Furthermore, you´ll need to get familiar with rules and zoning laws so you don’t have unexpected surprises. Finally, once you occupy the space you have to assess whether it is equipped to handle growth one to two years from now. These are all valid concerns and it really boils down to your business organization and keeping track of everything.

The crucial and final aspect is securing financing. Once you have done some extensive research, investigated the scene, made calculations or projections, assembled the team and found the property, you can approach a bank. Get ready to provide plenty of paperwork along with providing tax returns. This is a thorough process and banks need to review all documentation and financial data associated with the business. It is a lengthy process, but as long as you have a real estate business that is profitable and generates positive revenue it will improve your chances of getting the necessary financing to grow.

Final thoughts and takeaways

The real estate business, for now, remains a safe industry to invest in. Nevertheless, with the new Trump administration it is important to keep track of legislation and changes announced, so it does not negatively affect your business.

After looking at the things to know before investing, RISMedia recommends investing in these real estate investments that produce ROI:

– Residential multifamily units

– Commercial multi-unit office space

– Real estate funds

The analysis includes suggestions like for example, who to rent out these different real estate options. Depending on the size of your business or enterprise, do your homework and due diligence of knowing what investment you are getting into. Working in real estate requires a deep understanding of the rules and regulations, which constantly change from year to year.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.