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4 Factors to Consider Before Investing in Real Estate

4 Factors to Consider Before Investing in Real Estate

Investing your hard-earned cash into real estate may seem like a much safer investment than investing in the stock market. While no one truly knows what the stock market will do from day to day, there’s almost no question that the land you own today will just as much – and probably more – as time goes on.

However, this doesn’t mean that investing in real estate is a 100% foolproof way to earn some extra cash throughout the years. There are many factors to consider when deciding whether or not to purchase a lot of land. If you don’t know what you’re getting into, you might end up getting yourself in more trouble than it’s worth.

Know Your Purpose

Well, duh: Your purpose is to make money, right?

That’s pretty obvious.

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But you need to think about how you want to make money through your real estate investments.

Are you looking to make some quick cash off of a sure thing, or are you looking to invest in the long haul? Do you plan on improving the property you purchase, or leaving it as is? Do you want to rent the property out to other tenants, or is your prime motive to sell for a profit?

If you don’t really know what you plan on doing with a piece of property once you purchase it, you shouldn’t be investing in it in the first place.

On the other hand, once you know what you plan on doing with your investment, you’ll be able to focus your efforts in order to maximize your potential profits.

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Know the Property and Area

You can’t just decide to purchase property without understanding the its nuances, as well as the nuances of the surrounding area.

Okay, you can. But you definitely shouldn’t.

Different factors come into play depending on whether you’re purchasing property in a residential or commercial area. This includes leasing terms, interest rates, and other factors which will ultimately affect your bottom line.

Are you looking to invest in high-demand areas or more low-end housing? Once again, this all depends on your purposes for investing, as well as the amount of time and energy you can expend working on the property.

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Know the Market

You might know exactly what piece of property you want to invest in.

You might know exactly what you’re going to do with the property once it’s yours.

However, there are factors beyond your control that determine whether or not now is the right time to invest your money.

Just as when investing in the stock market, when it comes to investing in real estate you want to buy low, and sell high. That’s pretty straightforward: If you want to make money by flipping your investment, you’ll want to sell your property for more than you bought it for.

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But if your plan is to rent out your property, you need to know whether or not people or businesses looking to live or operate in the area are able to afford a price that will make the investment worth it on your end. In other words, you need to know that your property isn’t going to just sit there with a “For Rent” sign for months while you pick up the monthly cost of maintaining it without any income to show for it.

Know the True Cost of Investing

As alluded to, investing in real estate isn’t as simple as shelling out one lump sum payment and watching dividends roll in.

No matter which type of property – residential or commercial – you invest in, you’ll accrue costs throughout your ownership of the property on a monthly basis. You’ll want to anticipate these costs – such as for maintenance, utilities, taxes, and interest rates – so you’ll have a good idea of your net profit per month.

You’ll want to obtain copies of the amount paid toward utilities, taxes, and insurance for the property in years past. Of course, these documents will only give you a general idea of future expenses, but it’s much better than going in blind.

Regarding loans available and interest rates being offered, consult a mortgage broker. They’ll work to find you the best deal possible that saves you money on interest payments that can ultimately be used to improve the quality of your newly purchased property.

Featured photo credit: Real Estate Photography / Marcel Suliman / Flickr via farm4.staticflickr.com

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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