The business of real estate in Ohio can be pretty tricky and involves many facets that can seem hard to circumvent. But, if you become informed of everything involved, then you will have no problem getting over any hurdles that may lie in your path.
So, if you are in the market to begin investing in real estate in cities such as Columbus but don’t exactly know where to begin, we’ve listed a few pieces of advice that should help you to fully understand what you need to know before investing in real estate.
Do Not Make Any Speculations
Too many times, inexperienced investors make the mistake of speculating on real estate in hopes of a huge amount of appreciation on a property. Instead, what they should be doing is using their property to generate a flow of cash. A great example of this is having a rental property that is both for middle-class and stable. When this is done, an investor has little to no risk if the market decides to do a downturn. A wealthy investor knows that cash flow is the driving force.
Do Not Make Improvements to Everything
As a first-time investor, you need to understand your investment’s “Why” purpose. Ask yourself; who will be your target and what limitations do they have? If you plan to rent out the property, then an improvement in the kitchen may be all that is needed. If you are in it to resell, then getting an idea from neighbors will tell you what does and doesn’t work so that way you will have a better guide. Neighborhoods such as German Village, Grandview Heights or Downtown are ones of the best you may want to consider for making an investment.
Have an Expert Help You
Before investing, you need to make sure that you understand everything about the market and not be in a hurry. There is nothing that says you have to buy local, but it’s a great idea if you have an experienced advisor that you can trust. Make sure though, that you don’t just believe any number you see. The best way is to trust an advisor who has no personal interest in your property. Get ahold of a well-known property management company so that they can provide you with an assessment that is unbiased.
Keep Everything in Mind
Go for it! But keep in mind all of the financial obligations involved. This includes all property upkeep, county or city taxes (including any reassessments), as well as taxes for any capital gains earned. When it comes to real estate, it is a great way to invest.
Have Tenants Screened Carefully
Ensuring that your tenants are trustworthy and are able to pay rent in a timely manner makes a difference in the real estate investment world. To keep everything legal and know for sure if a prospective tenant is qualified is to have the tenant screened. This includes reviewing their credit reports payment history, any criminal history, and if they have had any evictions in the past.
Have a Budget Set Aside
Having a budget established with an amount that is feasible is always a good idea so that you don’t pay more than what the place is worth. It will also prevent you from getting attached emotionally to properties that might be above the budget that you have set. If you can, as an investment is chosen, try to have the property close to your own home. This will allow you to have easy access to the property and can oversee it a lot easier. Keeping your investment property close will also allow you to remain in the loop when concerning current trends in the local neighborhood.
Make an Exit Strategy
Whether you are looking to rent out a property or seeking just flips, you have to have an exit strategy if you need to suddenly pull out of the deal completely. This means you need to know how the rental market works. You also need to make sure you’ll be able to make a profit after figuring out your repair value if you plan to flip your property.
No Need to Start Big
There is nothing wrong with starting small and working your way up. This is why you need to make sure that your mortgage could be paid without any other income just in case a tenant moves and your property remains vacant for a while. Make sure that the property you find can be managed easily and the overall cost to operate it is relatively low. The state of Ohio has clear regulations when it comes to home loans and mortgages.
Make Sure to be Strategic
The worst mistake that you can make in real estate investing is to be uneducated about what strategies are the best for their situation. Due to this, you are constantly going to be making investments that are bad and that are riskier and with returns that are lower.
Know the Difference between Future Value and Income
New real estate investors often learn financial terms like CAP rate and cash-on-cash. They then use the figures produced by these to make investment decisions. What you need to recognize is the difference between future value and income. The reason why is because most properties are in neighborhoods that are transforming and have returns that are currently lower but have higher monetary returns for the future.
Educate Yourself about the Market
Learning everything about the market is crucial for being successful. For example, for commercial real estate in Columbus OH, it is not necessary to rely on a friend, lender, or real estate agent to advise you on a good deal. The only things you need to know better than your competition are the market values. With this knowledge, you will have the biggest advantage in real estate.
Get Others Involved
It’s important to get others involved when you want to become an investor who is fully advised by experts in the market. This way you can also execute the same types of deals that they do. Many ways are currently available for this like getting involved with REIA groups. Make sure to keep it local too. That way you have local people with the necessary knowledge. Another way is to volunteer and/or use technology to connect like social media. No matter which path you take, having the correct group or mentor on your side can keep you ahead of the game. Obtain as much practical understanding as you can and often. And when you can, teach others what you have learned in the process.
Decide on a Property Based on Upgrade and Cost To Buy
While a property is being chosen for repair in order to resell or rent, concentrate on a few influences like the amount that can be sold or rented after renovation, improvement costs, and the purchase price. A home that has moderate quality in a neighborhood that is growing has the best chance for profit. Basing the decision on growth potential is a lot smarter than basing it on a home that you could see yourself living in.
Ask Around if the Investment is a Good One
For investments involving apartments, make sure you keep the investment separate from where you live. If you don’t then you might confuse yourself in the process.
Don’t Get Too Excited
Keeping your emotions under control and maintain your principles after analyzing all of the data. Don’t go for the highest bid in order to obtain your first property. You would be just wasting time in obtaining a lot of information if you only have a bidding war. This is why you need to find the right property deal and when to avoid the many others.
So remember, no matter where you take your first investment property, whether it’s commercial property in southern Florida or commercial real estate in Columbus OH, you are sure to gain the best investment when you follow the advice above.