Deciding to invest in real estate must be made with all the available data you can utilize. Some investors make the mistake of purchasing a new property with the intention of renting it out, but without a full understanding of what comes with the investment as well as their responsibilities as a landlord. In this article, we will outline three important questions that real estate investors must ask when assessing a property.
Are you going to be an active or a passive investor?
There are a number of challenges that comes with investing in real estates as a business venture. Some investors would rather leave these challenges in the hands of their property managers. Being a passive investor, you might lose a portion of your income because you will pay off your managers, but you may have more free time to enjoy the rewards of your investment. It is important to consider first which type of investor you want to be. You also need to consider the full range of benefits as well as challenges associated should you become an investor.
What is your timeframe?
Real estate experts can tell you that the industry is cyclical. This only means that prices can rise and fall depending on numerous marketplace factors. It is important to understand that prices change from time to time. When you are reviewing historic patterns in real estate pricing, you should consider your own investment timeframe. Ask yourself this: Will this be an investment for ten years? Twenty? Your answer to this question can determine which cities and properties are suitable for your investment.
Do you have an exit strategy planned?
Before you invest in a property, you need to have a comprehensive plan as well as an understanding of the marketplace dynamics as they determine the value of any property. Before placing your money into an investment property, a refined exit strategy should be in place. When planning, you have to begin the whole process with an end goal for your investment. Doing so allows you to create the path to meet that objective over your long-term plan.
There are several factors to consider before you can begin investing in real estate. It is important that you have all the facts and figures ready. If you are really leaning towards purchasing a property for investment purposes, a consultation with seasoned real estate representatives such as Daniel and Bonnie Wan is essential. They will let you know the potential value in your local region, and they can also give you the best real estate advice. Call them at 905.883.8888 at your earliest convenience.