People often think of investments as something that they themselves cannot enjoy.
Think stock portfolio, retirement funds or a something that just sits in a bank vault. While they may provide great returns in the long run, they often do not provide the same pride in ownership which comes with owning property.
Contrary to popular belief, investing in real estate also doesn't require extensive prior experience. It can often start with the purchase of one's own primary residence. Best of all, the property becomes an asset that can be enjoyed by its owner, while simultaneously growing in value. Try doing that with your 401K.
It's never too early to start the real estate investment journey. I will share one of my friend's experiences. What sets her apart from other buyers on the market is her mindset. She's looking for an undervalued property with massive upside potential. She won't be looking for the perfect property that has all the elegant touches and appliances she's always wanted. She will add those later, and with time, her property will become a neighborhood charmer that her friends will be dreaming of owning. This puts her in a powerful position to capitalize, should she chose to do so.
All the while, she has paid off part of her mortgage, built equity, received an annual tax-writeoff for paying interest on her loan and is eligible for $250,000 in tax free profit on the sale of her property (if she has lived in it for 2+ years). Not a bad deal, right? Her friends have been busy paying their landlords, don't have a property to their name and enjoy having their rents raised on them every year.
Here are 6 important steps to begin the real estate investment journey:
1. Cut the ties with your landlord
Recognize that it's time to start paying your own mortgage, not your landlord's.
2. Set your criteria
Get out a notepad and jot down what you're looking for? Start with your price range, neighborhood and property must-haves. Be flexible and recognize that finding something with huge upside potential may require sacrifice on your part.
3. Window shop
Now that you have your criteria set, it's time to hit the streets and see what the inventory has to offer. Don't be afraid to take your time, but also don't be afraid to quickly pull the trigger. You won't be the only one to recognize a good deal.
4. Make the purchase
The headline says it all. With this purchase, you have officially entered the real estate investor club. You're now ahead of the game and well on your way.
5. Enjoy your property and the benefits that come with it
This is your home. Make it your palace. Pay down your mortgage, build equity, watch your property value grow and receive annual tax benefits.
6. Time the market
There's nothing like the feeling of cashing out on a great investment. When the time is right, consider listing your property. If you've lived in it for 2 or more years, $250,00 of your profit will be tax free.
Blooming Sky specializes in New York City real estate investment opportunities. We help clients find and secure properties that match their investment criteria.