4 important tips that every beginner investor in the world of real estate should know (Photo: ShutterStock)
If until about a decade ago the world of real estate investments sounded like a deep and dangerous ocean that only capital sharks could swim in - today more and more people allow themselves to put on a bathing suit and jump into the water. It started with entrepreneurs and young investors with vision and business acumen,
and continued with employees, private business owners and retirees who wish to generate passive income for themselves that will increase their financial security and allow them to spend more quality time with their children and family.
If you have managed to save a respectable equity over the years, and you refuse, and rightly so, to let it degenerate into a checking account or a bank savings plan that will yield you a zero return, Or in other words, if you want your money to make you more money - the field of real estate investments is a great place for you.
However, of course, as in any field, just before you jump into the water and start swimming, it is important that you acquire as much theoretical knowledge as possible that will save you from making difficult initial mistakes, which could cost you dearly.
We have compiled for you 4 important tips that will help you take the first steps in the world of real estate investments:
Stay away from rigids: an investment with zero risk is the most dangerous investment there is
The first and most important tip that will accompany you in each and every transaction in the world of real estate investments, and in the field of investments in general, is:
there is no such thing as an investment with zero risk.
There is no such animal. Are you guaranteed a high and guaranteed return? Are you dreaming of getting rich quick? It is very possible that you are trying sell you a cat in a bag.
There is a key rule that says that if something sounds too good to be true, it really is. Therefore, before any transaction that smells a little suspicious to you - don't be shy to ask all the questions you want to gauge the credibility of the entrepreneur, the His experience and professionalism. Did you smell some leakage from the regulation? Stay away.
Prepare a detailed investment strategy - prepare for every scenario
The second and equally important tip: prepare in advance as much as possible and know your financial capabilities.
Just like in the famous Russian saying "training is hard, battle is easy", even in the world of real estate investments you should work hard before going out into the field and prepare an investment strategy that will accompany you at every step in choosing the right and wisest real estate investment for you.
In the investment strategy, you will create a path with limits for yourself.
Answer questions such as what is the level of risk you are prepared for, what is the budget you are able to meet in the initial range for one-time expenses and also in the longer range for multiple expenses, and what is the real estate property you are thinking of investing in (residential apartment, office or store, Land, commercial building, etc.) Of course, you will also take into account the costs of improving the property - which is considered an investment for everything, but understand with yourself whether it is money you want, or can afford to invest it.
Also try to think about the location of the property and translate that into time and money calculations (for example, if the property is located far away and you occasionally have to travel there, it will cost you money and time).
Also, it is very important and even critical to make sure that the transaction fits your financial capacity and will not drag you into unexpected financial expenses - do not be tempted by offers that are far beyond the budget and the desired level of risk that you have defined for yourself in the investment strategy.
Also, if you take out a mortgage for the investment, don't forget to do the calculation according to the amount of the monthly repayment, the amount of the interest (according to the current, and according to scenarios of an increase in the Bank of Israel's interest rate, when does it stop paying for you?) and the amount of taxes that you will have to pay on the rental income the property, if any.
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After you have prepared an investment strategy, set limits for yourself and learned to know your desires and your financial capabilities in the best possible way, it is time to get to know the market in which you are going to invest.
Study well the possible risks and the potential of investing in real estate in general and in each region and population in particular. For example, if in your investment strategy you decided that your budget allows you to invest in a student apartment near the university in Be'er Sheva, you will find out what the possible risks are in renting an apartment to students at B.S.
Does the high competition lead to lower rents?
Is the demand for quality apartments higher than the existing supply and are apartment prices expected to rise?
Do the necessary homework before going out into the field.
It is impossible to learn swimming by correspondence - go to the field and consult with experts
Have you realized that there is no such thing as an investment with zero risk?
Have you made a personal investment strategy and studied the market in which you wish to invest?
Excellent.
Now you know more or less what you want, and understand the "language".
The next step is to go out into the field and gain practical experience.
How did the beehive band teach us?
You can't learn to swim by correspondence.
As in many fields, also in the field of real estate, the perfect teacher is the practical experience accumulated over the years. And such experience, obviously, takes years to accumulate.
Therefore, the fourth tip is to hire the services of real estate consultants who have experience in locating and examining real estate transactions in the local market. You must be thinking to yourself, why did I invest all this time if I end up having to pay money to a real estate consultant - a good question, but the thought is wrong.
How did the beehive band teach us?
You can't learn to swim by correspondence (Photo: Reuven Castro)
The first tips are designed to help you learn about yourself: in which area, city or neighborhood you want to invest, and how much you want, or can afford to invest.
Now, after you have learned all these, you can talk to the real estate consultant you choose at eye level, in professional language, and most of all - you will know how to make the right choice. Remember - doing
things yourself may be cheaper on paper, since you save the cost of the consultation, but This is not necessarily true in the long term, certainly when it comes to your first transaction in the field.
And now - go conquer the world of real estate
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