One great way to diversify your investment portfolio is vacant land. But before you can join the ranks of land investors, there are some things you should know. Those who jump into the fray of real estate investing before gaining a full understanding rarely become successful. In this post we look at 6 Things Land Investors Wish They Knew Before Buying Their First Property.
1) Income Goal
It is all about return on your investment. Starting your real estate investment business by learning how to set realistic goals is a move many land investors regret not making prior to buying their first property in Arizona or other locations. This should include an income timeline both in the long and the short term. Laying out your goals helps you to watch them grow throughout the years as you realize your investment dreams. It helps you to celebrate milestones you reach along the way. If you do not understand the returns on your investment, you may never reach the goal you have in mind. It is extremely regrettable to find out far too late that you should have taken different actions, facing a future that requires far more from your investment stream than you will ever realize. The ability to determine the true numbers before making your investment will ultimately help you to avoid self-reproach and disappointment.
2) Thinking Long Term
Many land investors wish they had known to consider long term investment value before buying their first property. It is only natural to start out by seeking out the lowest price you can find. However, in real estate investing a good price in the short term does not necessarily translate into a fruitful long term investment. It is exceedingly vital to understand the major impact that the location of the property will have as time passes. Don’t look back and regret selling off real estate that will increase in value and income over the years. Holding property for the long term translates into equity as time passes, do not trade real estate as if it were a stock, stay in it for the long haul with well thought out investments.
Understanding which properties you can actually afford to purchase can be accomplished by creating a budget. This will help save you time by concentrating your focus on the properties which align with your budget. Through reliable inspections and appraisals, and the ability to determine your true expenses, you’ll avoid the pitfall of buying above your means. This is another very significant thing land investors wish they knew before buying their first property in Arizona. By having a true grasp of the bottom-line, you can fend off sudden and unexpected financial catastrophes in the future.
Using other people’s money as leverage as an investment strategy is something else land investors wish they knew before buying in Arizona. Through this method, you are borrowing money, allowing you to purchase more real estate than you would have been able to on your own. This means you can start your real estate investment business while holding onto your own capital. While it can be a risk, with careful calculations and wise investments, the payments on the mortgage you hold can be far outweighed by the return on the income you will earn.
Understanding the time involved with each part of the transaction, which transpires behind the scenes in real estate must be calculated for realistic expectations. Steps that can eat up time, especially when not well planned, include inspections and appraisals. Experienced land buyers comprehend just how protracted the process can be, aware of a waiting period before income from the property can be relied upon. A genuine understanding of this timeframe is an additional thing land investors regret not having before buying.
6) Realistic Costs
Going into the real estate investment business with open eyes means you will need a true estimate of the expenditures you may be facing. Learning how to find these numbers is something land investors wish they knew before buying in Phoenix. When talking about vacant land, most often maintenance costs can be minimal, as there’s really nothing to maintain. However, if you buy land in an area with a property owners association you may encounter annual dues depending on what the HOA or POA covers, such as road maintenance or shared amenities. First time land investors need to take time to carefully research each property to avoid unexpected fees and costs that may come with the property.