Will You Jump Into Real Estate in 2022?

So now that we are a couple of weeks into 2022, have you decided that this is your year to either start investing in real estate, or to build upon your already successful portfolio? Remember 2021? There was so much and then so much disappointment. Our health, our finances and our livelihoods, despite available vaccines, continued to be in jeopardy. My heart still goes out to all who have lost their fight with the Coronavirus, as well as those whose businesses continued to suffer greatly. And while many of us struggled keeping our real estate businesses, or at the very least dreams of it, alive, we have faith that 2022 will inspire us to overcome obstacles we faced last year in order to achieve our goals this year. So will 2022 be the year you either start investing in real estate or continue to build your portfolio?

Let's hope so. Remember there's always a need for real estate. But where do you begin? And what do experienced investors do to continue building their real estate portfolio? Well, it comes in stages starting with getting your finances in order, evaluating the market, plotting a plan, seeing the properties, making offers with winning negotiation skills among many other things. But doing the basics will help you achieve your goals.

Evaluating the market. Sometimes easier said than done, right? With market fluctuations, changing interest rates, demographic developments and neighborhoods in transition, it can be tough to get a pulse on the area you are interested in. Here in Pittsburgh,, PA we are still in a seller's market, meaning that inventory is still low driving home/investment property prices up. Buyers are often finding themselves in multiple offer situations. Sellers are smiling all the way to the bank as they are in command. As a buyer, you need to develop or improve upon your negotiation skills especially if you are in a multiple offer situation. Sellers may reject offers with a lot of contingencies, sometimes seller assist and of course low $ offers. And each property you consider requires calculations in order to determine feasibility, prior to just jumping in. So how do you get what you want? There is no standard answer to this, but often it comes with experience and unfortunately, some lost deals. So learn from your experiences. Investing in real estate is certainly an education process. But with perseverance, tenacity, and a little finesse you will find that perfect property in a neighborhood that makes you money.

So, how do you find the right neighborhood to invest in? Simply said...with proper planning. Planning in order to protect your future. You've heard the expression location...location...location right? The phrase started out as advice for businesses, but throughout the years it has entered into the real estate investing world. You must know the right areas to invest in. So look at the areas that have shown increases in market value, escalating growth, and a rise in property development...even population. It's been said that when you see a lot of construction cranes, that means the city is growing. When a neighborhood is "up and coming" we see new businesses moving in, buildings being refurbished to rent or sell and opportunities to cash-in escalate. By the same token, we also see these neighborhoods explode. That's when great deals start to wain. The trick is to get in early but still at the right time. Consider following reports of redevelopment planned for an area and watch how it actually develops. And don't be afraid to try neighborhoods that are close to those that have already been developed. Think "urban sprawl" or "gentrification". You can plan for it. And planning comes with knowledge so stay close to those real estate news publications, social media posts and word of mouth. Here in Pittsburgh, I am currently seeing a lot of buzz about the Strip District and Northshore, as more and more apartment housing complexes and hotels are being constructed. And rents for these are going at a premium. Of course the buy in on SFH or MFH might also come at a high price point so choose wisely. You can still make money owning Mediterranean and Baltic Avenue rather than Boardwalk and Park Place. You just have to decide what kinds of properties you are interested in, what area is best to invest, their cost to buy, rehab and maintain, what they are currently drawing in, what your gain would be and how long you plan on keeping them. Again, planning and doing your calculations is essential and all a part of your due diligence. So is actually seeing the properties.

In these days of automation, you can virtually tour just about any property you're interested in. Often this is more readily available for personal home buyers than investment property buyers. By all means click on those virtual tours but remember: seeing is believing. Sometimes the properties you see listed are missing information that can become crucial in your decision. Sometimes the lack of pictures online or super enhanced pictures warrant a closer look in person. If you can, go see those properties as this also gives you an opportunity to assess the neighborhoods and other properties for comparison. And certainly get complete information and ask questions as needed. If you can get a contractor to go with you, do so. If you are an out of state investor, connect with the locals in the area you are interested in. Realtors, who already have an established business relationship with investors, are good sources to be your "boots on the ground". When I tour properties I take lots of pictures and videos. I look for cracks in foundation, uneven flooring, mold and other health and safety issues not typically shown in the listings. Almost anything can be remediated, but you have to evaluate if the cost to fix is worth the investment. After all, you still want to make money!!

Speaking of money and finances, if you have the resources to pay by cash, great. Run the numbers for feasibility. You also need to determine how much you are willing to spend. If you don't have the cash lying around and are looking to finance, like most of us, Get a mortgage Pre-approval. With a pre-approval, the lender checks and verifies your financial and employment information through documentation, as this confirms your ability to qualify for a mortgage. Also you will want to know what types of mortgages you could qualify for and the terms involved. If you qualify for a mortgage, a lender will approve a specific loan amount. Why is this so important? First off, you want to know how much you qualify for in order to be realistic in your expectations of what you can buy. It's important to do this PRIOR to even looking at your first property. Why bite off more than you can chew? So get your finances in order as a part of your due diligence.

So as you can see, it takes a lot to successfully invest in real estate. But you can do it. 2022 will be your year!!