Real estate is one of the best investments someone can make today, especially in Boston. Boston is predicted to have one of the hottest housing markets in 2014 and has a 3.6% capitalization rate according to Forbes. Real estate prices are expected to rise across the country, so now is better than ever to buy or invest.
Here are some tips and things to know when investing in properties:
Know the right location: Always investigate the location of a potential investment. Buying in areas of high rent and low supply of properties is the ideal situation for an investor. Buying the worst property in the best location is a better investment than buying the best house in the worst location. There will be a greater reward having a property you can fix up rather than a finish property in a neighborhood that needs to be renovated.
Have the money lined up: It is important to have at least six months of mortgage payments saved up, prior to buying a first investment property. If you decide to rent out your property having the money to pay the mortgage for a couple of months will help while looking for a tenant. Having money saved up also makes dealing with future renovations and repairs easier.
Work with someone experienced in investment properties: When buying your first investment property it's always a good idea to work with someone that has years of investment property experience. That could be anyone from a real estate agent to an experienced investor.
Know the investment expenses: Aside from the mortgage and occasional repairs there are additional potential expenses depending or the property including:
- Legal fees
- Scheduled maintenance
- Capital improvements
Good bookkeeping is necessary: Easy paperwork is not included when investing in properties so you must decide if you can do the paperwork or if you should hire someone else. Decide if your bookkeeping abilities are good enough, if not you'll need to budget for a professional.
Don't quit your day job just yet: Don't assume that you'll be able to make a living off of investing in properties. Also don't assume you'll be successful at first. Wait to quit your day job until you are confident you'll be able to make a living off of this.
Learn the lingo: Like any profession, learn the lingo to avoid looking like you don't know what you're talking about.
Have an exit strategy: Always have a plan and an idea where you want to end. Even before buying a property plan everything out. Having multiple plans is even wiser and safer than having one. You never know what to expect when investing in real estate so always be prepared.