The wise men said that everything has a beginning and while at it, we can safely conclude that each one of us has a first time in everything. If you are thinking about investing in real estate, here are some important tips to help you to get off to a great start.
1.Pick your investment option: Niche Market
Your real estate journey will be a lot easier if you get to understand what kind of real estate product you would want to invest in and why. For example, you might want to develop a rental property to grow your investment and improve your cashflow. As such, you’ll look for a property that can fit those criteria in terms of accessibility, location, potential/target clients, zoning among other factors i.e if you are in Thika town and its environs, Thika greens, a gated controlled development estate would be a nice investment for residentials, Section 9 and section 2 would be ideal for the medium upper class apartments which Ngoingwa, Landless and Tola would be the ideal places to invest for a middle class investments
2. Property Use
Before you head out to search and invest in a certain property, you’ll need to sit down and decide on the kind of property you want. It can either be residential, commercial, industrial etc. In addition, research for the most suitable locations for your desired real estate investment. For example, Thika town is known as the industrial town of Kenya and as such you might want to consider it if you decide to invest in a industry. Ruiru is basically the bedroom’ for the larger Nairobi town
3. Prepare Your Finances: Set a budget
One of the biggest mistakes you can commit as a first-time investor is underestimating the costs that come with property investment. Remember these things are a financial commitment, and although they’re a lot more secure than a gamble, real estate investments can still take more than they can give.
Before taking the plunge, be sure to go over your financial situation first. Create a budget that will cover every impending fee in the process. Make sure to allocate an emergency fund, too, for backup. Review your cost of living and financial statements then create a projection out of those numbers to ensure that you can be financially stable even months after making the purchase.
This way, you can be sure to maintain a positive cash flow, whatever the circumstances may be.
It will also be helpful if you save for a down payment of a significant amount. A larger down payment is a preferable choice as it will reduce monthly costs, insurance, and even risks associated with the investment.
4. Follow A Timeline
Besides drafting a budget, you need to develop a timeline you can follow to track movements in your investment. With a timeline, you can distinguish which efforts in maintaining the property have been effective or otherwise. This timetable of goals also sets monetary expectations, allowing you to improve strategies to add more value to your investment.
5. Do Your Research: Price, Value and Location
Research is a key factor in any sector. It will be helpful if you researched everything about real estate investment strategies, challenges and other details before making your investment.
Get to understand the market you would want to invest in, in terms of comparable properties and prices. Understand the value system in that particular real estate niche. Invest only when you understand your target market.
6. Start Small
If you want to build a successful real estate portfolio, start small. In fact, many highly successful property investors began with just a single small property. When you start small, you keep your risk manageable and learn along the way. Starting small also offers a number of benefits like it’ll give you a chance to understand the associated process before putting large amount of money at stake.
“Think location, location, location. It is always nice to have the best location.”
― Donald J. Trump,
Location brings about the difference in appreciation in value, resale price and time among other factors.
Most probably, as a first-time investor, you will be looking at property that is close to your location. However, be careful not to limit yourself. Scout and take advantage of upcoming markets that may have better opportunities outside your local area. With the property management options and resources available today, investing in out-of-town property is easier than ever. All said and done, don’t be in a rush but check out several property sites before settling into one.
8.Tap into the experience of others; Build Relationships
Work on building relationships with other investors, real estate professionals and real estate agents. There are various organizations with skilled real estate agents who can help. Investing in real estate is not a solo project. You get the support you just need to contact the right person. You never know when they might be able to help you find a winning deal. It’s hard, if not impossible, to succeed on your own. Fortunately, there are plenty of people out there who are willing to lend a hand. Seek to connect with them.
9.Know The Numbers: Returns on Investment
Before you finalize a deal for a real estate property, it’s important to know exactly what type of returns you’re looking for, start by establishing your investing criteria and prefer investing in only those properties which meet your requirements.
So, make sure to have adequate information and idea about return on investment, appreciation rate and cash flow
10.Adopt A Business-Owner Mindset
Real estate investment is similar to business operations. Remember your main goal in investing is to generate profits. So, when in doubt, wear your entrepreneur hat on!
11. Find a Mentor
As you build your relationships, partnering with an experienced professional in the field is crucial, especially if you’re new to the world of investing in real estate industry.
What better way to learn than by seeking the advice of someone who’s been there, done that? If they start sharing their past experiences on how they pulled off a win or bounced back from a loss learn from them.
You can also consider partnering with someone who may be able to offer you solid advice in their field for example, a good investor or friendly real estate agent. You’ll also want to attend Bigger Pockets investing forums, where you can find plenty of experienced investors who are willing to offer helpful advice. Take this opportunity to seek expert advice, particularly when you need to make an important decision in your investing process.