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3 top tips for beginner real estate investors

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If you are an upwardly mobile woman, working at a great job, or already on top of a successful career you might have started thinking about how you could put any extra money you have to good use. Of course, the best way to grow your wealth is to put your money have to work via investments.

Apart from investing in stocks, bonds, and precious metals – you may have thought about investing in real estate. After all, real estate is probably a more tangible investment than paper assets such as stocks and bonds. However, before you start buying up properties, here are three important tips that could get you on a sure footing for investing in real estate.

1. Location is important

You can always renovate and upgrade a house, but there’s not much you can do fix a beat up neighborhood – even the government has a hard time getting some neighborhoods in order. Before you pay the down payment on a real estate asset, you need to be doubly sure that the property is in a decent location.

You’ll find it much easier to rent out or sell a poor house on an excellent street than to rent out or sell a great house in a bad neighborhood – if you want the right kind of tenants by the way. The location of a property influences its curb appeal, the number of people that will be interested in moving into the property, and how much money they’ll be willing to pay to live there.

2. Don’t mistake a rental property for a dream house

When you want to invest in real estate, you need to be analytical enough to make the mental differentiation between a rental property and a dream house.  You can afford to make emotional decisions on a dream house to buy it for more than it is really worth or to pay a premium for some additional features in the home. However, you can’t afford to make emotional decisions on a rental property because you’ll end up in a losing deal.

For instance, it might not be smart to have a swimming pool in a rental property because pool maintenance is expensive. Unless you have the funds to be involved in luxury real estate and you have the connections to know people who rent such houses, the pool will eventually become abandoned. The worst part is that people will be more interested in renting a house that doesn’t have a pool than renting a house with an abandoned pool.

3. Beginner investors should avoid upper fixers

If you are a beginner in the real estate market, it would be in your best interest to avoid fixer-upper properties. It is often tempting to look for cheap properties – in theory, you can buy them at bargain basement prices, spend some money fixing them up, and then sit back to watch the rental dollars roll in. In practice however, an upper fixer often turns out to be more trouble than it is worth for first-time homebuyers or real-estate investors.

If you want to be involved in upper fixers, you need to have built up a relationship with a reliable contractor who does excellent work at cheap prices. An upper fixer could also be a steal if you have expertise in DIY with home improvements and you have lots of time to spend on the project.

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