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Real Estate Investment 101 – Basics You Need To Know

Real Estate Investment - All You Need To Know

At Litpoodle we are often asked why we write so much about Real Estate investing. It’s because, despite the sea of information on real estate investment on the internet and our own blogs, people are still left confused about nuances. When we did an extensive article on How to start investing in Real Estate, we were flooded with so many questions. We realised that Real Estate Investing is a vast area and we want to simplify that information for you – just as Litpoodle, our real estate investing app, generates simplified real estate investment metrics.

Having said that, It’s important that you pull up your socks and do it fast because home values have increased across the USA have increased by 17.7% in 2021 since August of last year1. This is both good news and bad news – good because your existing investment will appreciate and bad because your potential real estate investment will cost you more as days pass.

As a first time investor, all this information can be overwhelming. So much so that you almost want to not do it…almost! Remember that real estate investment is easy when you know what to expect. A good strategy coupled with an agile real estate investing software makes everything easier. 

But what is this everything? Sometimes you really must be wishing that there was a friend who could walk with you through the process. Someone who has the experience, the smarts and coffee to cheer you on. Well, we don’t know about the coffee, but the rest we have sorted out. 

Let’s together dive into the world of real estate investing with your trusted LitPoodle.

Real Estate Investment Process – How It Works.

The Where 

Where Should I Invest in Property?

What’s the first thing you will do on your real estate investment journey? Find a property! Sorry folks but you got that wrong. The first thing you will do is narrow down on is your neighbourhood in your region if you are investing locally or the region itself, if you are investing remotely. This is the holy grail of real estate investing. So much so that a whopping 80% of home buyers value the neighbourhood quality over square footage2

Local Buying – Your neighbourhood matters. It is what will determine your rental yield, effective tax and appreciation. Be sure to check it out to gain a deeper understanding of what metrics you should look for when buying homes locally.

Remote Buying – What if you aren’t buying locally and want to opt for a remote property? Remote buying definitely opens up more options for you. We have covered this in ourtop regions for real estate investment’ with key metrics in our blog. Yet there is a downside – that of control. You exercise less control over the entire process.

But this is a minor roadblock since apps like LitPoodle are trying to make remote buying an easy and safe process. We do this by listing neighbourhoods that are ideal for your budget and requirements within the region of your choice.

Disclaimer (Nothing scary, we promise) – While you can buy a property without seeing it, we highly recommend you have one visit before you put your signature on the papers.

The How Much

How Much Money Do I Need?

You can start with a $0. No, we mean it and this is exactly what we have covered in our article on ‘how to invest in real estate with little money’. When we say little, we mean little! A low budget doesn’t necessarily mean fewer options, it just means you have to widen your search. That’s exactly what LitPoodle helps you do – explore more options from the comfort of your couch. Take for instance the fact that Dallas, Houston, and Miami are great options for a lower budget because they have the least number of competitive bids3. If you do have a higher budget then look towards Austin, Texas. 

These are insights that LitPoodle can give you. Another aspect that will strongly influence your budget is ‘the what’. Curious? Keep reading.

The What

What Type of Property Should I Invest In?

So it’s established that the most popular real estate investment options are townhouses, apartments, condos and single-family homes. This may sound like a cliche, but each comes with its pros and cons. Nonetheless, assessing a property with little knowledge of its type can be detrimental. Be informed rather than be sorry, is our motto. So let’s quickly tell you what each type has 

Condos

Condos are great as an ownership option because while the operating costs are high due to HOA maintenance, the appreciation costs are higher. These are also comparatively easier to afford. In May 2019, the median sale price of a condo was $257,100 and that of a single-family home was $280,200 4.

Townhouses

These are good options for rentals as well as ownership. While townhouses can’t be entirely private since their walls are shared, nonetheless they are more popular among renters. The privacy, spaciousness coupled with convenient locations make townhouses stronger on the ROI front. Also while HOA maintenance costs do apply, the added flexibility in the use of space is something renters enjoy.

Single Family Homes.

These usually appreciate faster than condos or townhouses5. Making them a good pick for a Real Estate investment. If you are looking at renting the property, then occupancy will not be an issue. This is due to the fact that single-family homes are averaging at 94.5% occupancy6.  It doesn’t stop there, since April 2021 single-family rents have soared to 5.3% compared to April 20207.Just keep in mind that while the rental yield for these homes is high, so is the operating costs. So plan your budget accordingly.

Smart homes are another sub-set within property investment that’s gaining traction. According to a survey, 63% of Americans want smart and sustainable homes. 58% look for smart lighting options.  Here’s a little known fun stat for you, 30% of millennials don’t see a garage as necessary!8 So don’t brush off a smart home as yet another fad. Interested renters might be willing to pay higher rents for such homes.

The Who

Finding an Investment Friendly Real Estate Agent

Finding real estate agents is easy! Finding investment-friendly agents is a tad bit harder. If you are buying property with investment as the goal, then working with a specialised agent will do you good. While you can do your own search, ask around or even put up an ad, LitPoodle makes the process easier for you. Our real estate investment software has a list of credible agents whose expertise will help you make the right choice.

The How Long

How Long Before I Can Finalise My Property?

On average, you might up to 5 months to shop for a property and another 5-69 weeks to close a deal. During this time you or your agent will be making multiple offers to current owners. So this timeline can be extended or perhaps even shortened depending on how the offers span out.  Sadly, buying real estate is not as easy or quick as we would all like. But LitPoodle, our real estate investment app, is actually designed to make the process faster. 

How? With property listings, comparatives, suggestions and metrics that tell you the ROI, rental yield and so much more. You can hire an agent and bam, you are ready to make an offer.

Don’t believe us? Sign up to access our real estate investment app – it’s free, fast and oh so smart.

Sources

 

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