:max_bytes(150000):strip_icc()/GettyImages-2147876666-4c6d4d4432304cdfb6ac926a62f6a2f8.jpg?w=1200&resize=1200,0&ssl=1 "Secrets to starting real estate investing that experts swear by")
The ones who are consistent make money with real estate know the market well. They know what new developments are in the pipeline. They are aware of local transport and schools. They know everything about the area in which they invest.
Stay ahead of the competition investing in real estate means doing your homework. If you’re new to the industry it can be daunting, but in this article we’ll teach you six tricks professionals use to stay ahead of the trends instead of chasing them.
Key Takeaways
- Consult local resources to determine which areas are hot now and will be hot in the future.
- Look for the strongest demand by seeing if home prices are rising faster in one area than others, or if they are higher in one place than in neighboring cities.
- New infrastructure shows that a community is growing and can be a profitable investment.
- Less congested areas with lower property taxes will generally have higher demand.
1. Study local prices
The first things to study are the current price trends in the area.
A potential, for example investor need to see whether the price of houses in one area is rising faster than in others. Then check if the average house price is higher than in other neighboring cities. This gives an idea of where the greatest demand is.
Over time, you will begin to develop an idea of which prices are reasonable for certain properties and which are overheated.
Understanding prices is key to making a profit in real estate, says DJ Olojoa real estate agent and real estate investor in Atlanta, Georgia. “You make money when you buy real estate, and the market is constantly changing,” Olojo says. “If you pay too much for a property, it will be hard to make a profit. But if you get a good deal, it will be hard not to make a profit.”
Real estate agents and real estate agents are a great source of this information, given their access to the Multiple Listing Service (MLS). The local newspaper, online real estate sites that focus on the area, and the local government may also have a record of recent transaction prices.
2. Be locally involved
Networking is the key to success in any career, and real estate investing is no different. By getting involved in your local real estate investing community, you can make valuable connections and learn a lot about the market in your area.
“Get involved with your local real estate investor association (REIA). This is an inexpensive way to learn from local investors,” says Olojo. “Real estate is local, so learning from people who operate in your market is helpful because they know the idiosyncrasies of your specific market. The good streets and bad streets. The good contractors and bad contractors. The good real estate agents and bad real estate agents. The good provinces and the bad provinces.”
3. Look for a catalyst
A sign that an area is emerging and will be desirable in the future is the development of new construction infrastructure. Seeing roads and schools being built is a sign that the community is experiencing a growth spurt, and investing in a growing community can be very profitable.
In addition, certain types of developments, such as new shopping centers, can be extremely attractive to home buyers and help sustain the housing market tax base low.
Noticing new developments can be as easy as looking out your car window as you drive by. Telltale signs of land clearing, surveying or the start of construction work in and around major roads are pretty big clues. Also consider widening the lanes, constructing turning lanes and installing new traffic lights. They all suggest the possibility of development to allow for more activity.
Then visit the town hall and speak with the road and building departments. They should be aware of any major projects starting in the area, and they may even be able to provide you with a state-level connection so you can check if there are any state-owned roads or highways. properties are also under development. Real estate agents also usually have an idea of what new projects are in the pipeline.
4. Discover alternatives with low taxes
If there are two cities next to each other: one with high or rising property taxes and the other along low property taxes– then there will usually be more demand for the one with the lower taxes.
Real estate agents can help you determine which areas have the best and worst tax rates. In addition, a simple phone call to the local population tax advisor can reveal how much the city charges in taxes per $100 of a home’s value. The appraiser can also let you know when the area was last assessed by the municipality.
You will also want to know if there will be a reassessment in the near future, as this likely means that property taxes are about to go up. Beware of cities and communities becoming overcrowded. Signs include schools being overcrowded and roads constantly congested. This could mean that the city will have to carry out major construction works to accommodate the influx of people. And how do they pay for that construction? Tax dollars.
5. Check the school rankings
Nearly every state ranks its schools based on how well students in each district do on tests in math and English. Sharp-eyed investors should look for schools that are moving up or at the top of the list. These areas are often desirable for parents. Access to quality education is a big selling point for home buyers.
There are several ways to find this information. Check your state’s board of education website. Also visit the schools yourself. Schools that score the highest are usually very willing to provide information.
According to Olojo, other factors to consider include population growth, crime rates, rental prices, the number of properties for sale in the area and the length of time homes remain on the market.
6. Keep an eye on the suburbs
If the properties in a large city or town have become too expensive, the areas on the outskirts of the city will most likely soon be in demand. Areas close to major bus and rail transport routes are even more desirable. Almost any area about to build a major train stop or new major bus route will see its proverbial stock rise in value.
To find out what is planned, contact your local rail or bus company to see if they will be expanding service in the area. The local town hall or planning department also has this information.
How can I start investing in real estate with $1,000?
What if I’m new to real estate investing?
How much can I pay for a house?
Investopedia’s mortgage calculator helps you estimate your monthly payment. Your payment depends on the price of your home, the down payment, the term of the loan, property taxes, your homeowner’s insurance, and the interest rate on the loan, which depends heavily on your credit score.
What if I am a first home buyer?
Buying a home for the first time can be challenging and overwhelming, whether it’s an investment property or a primary residence. Us Guide for first time home buyers provides an overview of what to consider before buying a home and what to expect from the buying process, plus tips to make life easier after you buy your first home.
The bottom line
It pays to do your homework and tap into local sources to determine which areas are hot now and, more importantly, which areas will be hot in the future. Much of the information is readily available; you just have to be willing to do the legwork.
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