Maybe you’ve always wanted to be a real estate investor, but you never felt like the time was right.
How can you set yourself up for success?
We have seen a lot of new investors succeed because they’re prepared, knowledgeable and willing to ask for help. We’ve also seen investors fail because they lack investment goals or direction, they try to do everything on their own, or they make impulsive decisions that aren’t based on facts or experience.
If you’ve been reading up on how to invest successfully, following the market that you want to buy a property in, and/or talking to local experts like brokers, real estate agents, and property managers, you might be ready to invest.
Here are some of the sure signs that will tell you it’s time to take the plunge and invest in a Grand Rapids property.
You’ve Set a Budget and Managed Your Money Well
Financial goals need to be set years before you buy an investment property. Unless you’re paying in cash, you’ll need a loan. Lenders will look for income, assets, and a responsible approach to debt. You cannot buy a large investment like a rental property in Grand Rapids without solid financial footing.
If you’ve developed a wealth strategy, set and achieved financial goals, and managed to save some money to support your investment career, you’re likely ready to explore investing in real estate.
You’ll also need to demonstrate that you can handle money responsibly – when you have it and when you don’t have it. As you begin to grow your portfolio and accumulate additional investments, there will be a growing number of expenses to cover. Cash flow will be more important, and you’ll have to understand how to balance expenses against income. If you’re doing that already, you’re ready to invest.
Be prepared. You’ll be ready to invest when you have some extra cash stashed away and a plan for how to spend and protect it. This starts with creating a budget and learning how to manage available cash and debt so you’re well-positioned to accumulate more wealth in the long run.
You’re Thinking Long Term Wealth with Grand Rapids Investment Properties
Investing earns you money over the long term. Buying rental properties is not a good way to get rich quickly.
It’s hard, when you’re just starting out, but you need to focus on your end goal rather than your immediate earnings. Sure, rent will start coming in as soon as you buy a property and get a tenant in place. But, you may not see positive cash flow in those first few months. It might take a year or two.
That doesn’t mean you aren’t making money.
If you understand this and you’re prepared for it, you’re ready to invest.
Even the process of buying a property can be lengthy. You may have to invest some time and money in preparing it for the rental market. Once you’re renting it out, be prepared to hold that asset if you want to earn real, long-term wealth. Don’t invest because you need a rent check every month. That’s a sure sign you aren’t ready.
You’ve Set Some Serious Investment Goals
Every investor is different, and the right investment property for one buyer might not be the right investment property for you. Have you set down a path that you expect to follow as a real estate investor?
Good decisions start with good investment goals.
Establish what you’re looking for and why. This will drive how you approach the market and what you look for specifically when you’re choosing the best possible property to buy. If you’ve already created these investment goals, put them in writing, and outlined some action steps on how to achieve them, you’re likely ready to begin looking for an investment property. Those goals will direct where you look and what you buy.
If you haven’t established any investment goals, that’s where you want to start.
You Know Grand Rapids Real Estate Isn’t a Passive Investment
You’ve likely heard real estate described as a “passive investment.”
That’s not exactly true. You need to be involved with your investment, even before it’s rented out. This isn’t easy, and it’s not without stress and discouragement.
Anyone can buy some stock at any minute. Investing in real estate, however, takes planning and strategy. It takes some real capital. This is not an easy industry to get into, and despite the idea that you’re investing passively, you cannot sit back and simply let your property work for you. It’s not going to repair itself. It’s not going to collect rent from tenants.
You need to invest time and resources. You need to stay up to date on the local market and all its trends. This is not a passive way to make money, and if you understand that, you’re ready to buy an investment property.
Understanding how to Evaluate Grand Rapids Real Estate
Buying a rental property as an investment is very different from purchasing the dream home that you’ll live in. It’s easy to become emotional about homes, but this isn’t your home. This is your investment property. You need to think about it like you’d think about a business.
Understand the features that make a good rental property. You don’t need to see the granite counters and marble floors that you might prefer yourself. Will good tenants want to live there? Is the location desirable? Is the lawn attractive but low-maintenance?
You need to know how to spot a profitable rental property. You need to know what the local rents are like and how quickly it will take to find a tenant. If you can objectively assess a property and work with Grand Rapids property managers to identify potential rental homes, you’re ready to invest.
We love working with new investors in Grand Rapids and the surrounding areas. If you’re thinking about buying a rental property or growing your existing portfolio, contact us at Short South Management & Development.