Investing in real estate: five tips

1. Rely on a mentor

Experience is the best way to learn. And the good news is that in order to learn, you don't have to make mistakes. When you are starting out with your real estate investment, the advice of someone who has been there before you can prove invaluable The first step, therefore, is to find a mentor to whom you can direct all your questions. He or she will help you identify the major risks in the early stages and suggest how to overcome the most common obstacles associated with real estate investing.

2. Study your markets thoroughly

Experience is essential, but it alone will not get you far. Real estate markets are in fact constantly changing and the key to a successful business is to be constantly updated. Remember that the market has several levels to delve into: local, national and international. It is therefore essential to know all three and it is in this way that the quality assistance of your real estate agent will become indispensable.

3. Identify your main source of income

There is more than one way to make money from the purchase of a property for investment purposes. However, it is important that this does not interfere with your chosen strategy. It is precisely 'strategy' that is the key word here, as well as the central aspect of investing soundly in real estate.

You should therefore be clear from the outset about your main sources of investment. Are you, for example, buying in an emerging market, banking on an increase in property value in the coming years? Or perhaps you are buying for a fixed investment income through a lease? In these cases, it is therefore important to understand whether you prefer to invest in a commercial property or rather focus on, for example, student leases.

4. Diversify your portfolio

One of the first tips if you want to invest in real estate, and one of the most important, is to diversify. Every investment carries a significant risk margin, so it is essential to prepare for even the worst case scenario. The easiest way to do this is to 'spread' your risk.

In other words, this means investing in several properties rather than channelling your capital into a single project. This kind of safety net is the key to a lasting real estate investment.

5. Understand the costs

There is ample profit potential in real estate, but only for those who know their finances very well. After all, making money is all about making ends meet and that means always keeping an eye on your outgoings and incomes.

In the UK, for example, the biggest costs for an investment in real estate come from stamp duty, property tax, capital gains tax and property transfer tax. Therefore, make sure you are fully aware of all the tax burdens of the country you are investing in, so that you can avoid nasty surprises later in the buying process.

These tips for investing in real estate will provide you with a solid basis on which to start building your portfolio. But there is still much to learn. Rely on a professional real estate agent to help you find the right real estate investmente is therefore the first step to a successful career.