How to Start Investing in Real Estate the Easy Way
Figuring out how to start investing in real estate is not necessarily easy. However, the initial steps are rarely as challenging as most beginning investors believe them to be. Local Pittsburgh experts can tell you that investing in commercial or residential real estate in and around the city is a straightforward process. With the help of a few simple strategies and tips, you too can start growing your income as a successful investor.
In growing real estate markets, such as that of Pittsburgh, PA, it is essential to start with the basics and make sure you avoid all the pitfalls of your first real estate business deals. You can then grow steadily as an investor and increase your chances of gaining higher returns and profits over the next few years.
Deciding on Commercial vs. Residential Real Estate
The first step in knowing how to start investing in real estate is to figure out which type of real estate you should consider. If you don’t plan on aiming too high, and you have little or no experience, you might be tempted to try purchasing apartments or houses. This isn’t always a necessity. Most successful real estate investors can tell you that a commercial real estate business will help you gain far more benefits and a much higher income.
First of all, commercial real estate will increase your income and cash flow. Commercial properties typically have better returns on investment averaging between 6% and 12%. Compared to the 1-4% returns brought in by single family home investments, those figures are strikingly higher. Secondly, when it comes to cash flow, the income you gain from commercial real estate is far more stable than the inflow of money you can expect from residential property investments.
When it comes to the basics of how to start investing in real estate, it is important to realize that the commercial real estate leases are also much longer, and in some instances, the tenants will be able to pay operating expenses as well. In most cases, longer lease agreements can contribute to a great extent to the stable income you can gain from owning, managing and renting commercial real estate spaces.
Initial Steps to Commercial Real Estate Success
In deciding how to start investing in real estate, Pittsburgh experts can provide a few invaluable tips to help you begin your journey. These steps may seem simple, but following them correctly will always be at the core of starting a successful commercial real estate venture:
- You can’t get too far without getting pre-approved for your mortgage. Pre-approval through the help of a trusted mortgage broker will help you assess your financial ability from the start and plan your first investment accordingly.
- Be sure to keep a record of your finances. From your mortgage payments to the cash amounts you invest in commercial real estate and to the valuable returns you get from your commercial properties at the end of the month, all your records must be thoroughly documented and organized.
- Set realistic goals from the start, and be sure to define your own unique goals. Common mistakes among commercial real estate investors include scenarios where their expectations are too high or they try to model their goals according to the achievements of other investors.
- In considering how to start investing in real estate, think about whether you’d want to build equity, use the building for your own business, or rent it out to tenants.
- Decide on the type of property you want to invest in, and establish the main location for your business in Pittsburgh.
- Are you willing to put in some of the work needed to manage your buildings? If not, you may want to consider hiring a reliable property manager.
- Stay focused, and exercise patience in managing your business and receiving your returns. When it comes to figuring out the details of how to start investing in real estate, commercial investment experts will usually reveal these as two of the most challenging aspects of maintaining a working business long term.
Useful Recommendations for Local Real Estate
For anyone wanting to figure out exactly how to start investing in real estate, the location of their business cannot be ignored. You’ll find that for your business to work in Pittsburgh, you will need to familiarize yourself with the local commercial real estate market, the main construction and real estate trends, and certain unique considerations such as Pittsburgh’s renewed tendency towards technologically advanced, eco-friendly infrastructure.
A recent estimate regarding the future of commercial real estate in Pittsburgh has shown that there is great potential in expanding the development of chemical and plastics manufacturing. Also, there might be future possibilities of extending your reach to regions outside of Pittsburgh, including areas throughout the Ohio Valley, Maryland and West Virginia.
All these options have to be weighed carefully before you can decide exactly how you want to begin. However, when it comes to knowing how to start investing in real estate throughout the Pittsburgh area, the potential for success will be extremely high, as long as you follow the tips mentioned here.