Beginners in real estate investing can learn from the experts. These experts have experienced the avoidable pitfalls of investing and as a new investor, there is no sense in committing the same mistakes again.
Clean Up Your Credit Report
When investing in real estate, it is almost certain that you are going to financial institutions to borrow money. Even if you think that your credit report is clean, it won’t hurt to double check. There might have been unintentional errors that you need to resolve and it is affecting your creditworthiness. Even a single error can let lenders see you as a loan risk. If your credit rating needs improvement, clean it up first before you apply for a loan.
Location, Location, Location.
You might have heard this line a lot of times already but there is a reason why that is so. Investing in a dead location will give you a dead investment. There is a thin line between optimism and lacking in judgment. Others may tell you that the piece of property you are eyeing will triple in price in the next 5 years. But are you liquid enough to wait for 5 years? Do not be overly optimistic and make sure that your real estate is in a good location, today.
It would also be best to look for the cheapest and most rundown house in the most expensive location that you can afford. This way, you can remodel it, flip it and sell it at the best price. Don’t look at the house, look at where the house is located.
Take Advantage of Tax Benefits
Talking with a tax adviser will be beneficial for you as there are tax benefits that can be possibly enjoyed when investing in real estate. One of the possible tax deduction that you can avail is the depreciation write-off. The depreciation of the building in the property that you bought can be written off in your favor. It is best if you consult a tax adviser as there are possible deductions that you can enjoy as well such as insurance, maintenance expenses, and mortgage interest.
The possibilities of getting rich through real estate are endless but we’ve also heard a lot of people losing their fortunes because of it as well. But do not be discouraged. Learning as much as you can will give you an informed decision on what to buy, where to buy and when to buy.