There’s nothing better than earning an extra dollar, and real estate is no exception. And as a real estate investor, one of the primary goals is to make as much money as possible from your investments. Maximizing your returns is key to achieving this goal, and there are a number of ways you can do this. In this blog, Abdullah Alajaji shares some strategies for maximizing your real estate investment returns.
Determine Potential of Area
How much should I spend on my real estate investment property? This question has been asked by thousands of home buyers across the country and the answer depends on where you live. If your goal is maximized return on investment then it’s important to consider not only what area has potential but also how much it might cost in relation to other locations as this will affect how much profit can be made with each purchase.
For example, you need to determine whether or not the neighborhood is stable enough for investors and landlords continue their business of renting out commercial space. A good tip we can give when researching potential locations is always look beyond what’s directly beside us own home. This will give us greater insight into what could happen if our investment does well in the long term then just looking at the immediate surrounding area.
Get Your Investment Figures
How much should I spend on my real estate investment property? This question always comes up. When it comes to real estate investing, knowing your investment figures is key. After all, you need to know how much money you can put into a property, as well as how long you can expect to make money from it. Knowing your real estate investment costs can help you make sure that you’re only investing in properties that are worth it. If not, then there is no reason for any of this time or effort – just let it go and find something else instead. Below are some things you must consider when doing this from Abdullah:
- First, you need to calculate your cash flow and determine whether or not you can afford to invest.
- Second, you need to consider your risks.
- Finally, you need to factor in your local market conditions.
Abdullah Alajaji emphasizes that you must always check out your numbers before purchasing anything. This way you can see whether you’re going to make enough money from your investment.
Understanding The Market Trends
The real estate market is full of trends and fads that go back and forth. Whether it’s interest rates, tax policies, or even the economy, things change in the real estate market often. Understanding what is going on in the current market conditions will help you make smarter decisions about how and where you invest in real estate. Here are some of the biggest trends affecting today’s real estate market.
- Interest Rates
Interest rates have been rising since the last recession. In fact, they were at historic lows for quite some time before beginning their steady climb upward. Lower rates mean lower prices, which means less money for you if you’re buying property.
- Mortgage Refinancing
There are many reasons people choose to refinance, whether it’s to cut interest payments, pay off debt or move up to a larger home. However, make sure you look over the terms of the contract closely to avoid hidden fees and charges. Get professional advice if you feel you might need it.
- Inventory Overabundance
As we saw with the stock market crash in 2008, sometimes the housing market just goes crazy. Home foreclosures skyrocketed leading to a huge inventory shortage. When this happens, the number of homes for sale increases dramatically. That can hurt your chances of finding a good deal. If you find yourself bidding on houses that don’t sell, consider lowering your expectations.
- Realtor Confidence
A study showed that only 38% of agents believe they can effectively manage distressed properties. Why do agents turn away from these types of opportunities? Because they prefer to pass those problems on to others. Unfortunately, when a property becomes distressed, the owner becomes vulnerable to getting taken advantage of, even financially. You’ll have little substitute something goes wrong.
The current market is unpredictable. But you can find ways to maximize your real estate investment by considering the economics of real estate. Follow trends and use this data to your advantage. There is a fine line between taking on too much risk and finding those opportunities. There are also ways to minimize maintenance costs to put you in a better position if you have multiple properties under your care. The optimal time to look into these opportunities is now before more changes are made, suggests Abdullah Alajaji.