How to Start Investing in Real Estate
You can earn money if you start investing in real estate! Real estate investment is investing in a house, vacant land, agricultural land, and commercial units, and it is the most profitable and less risky investment type when made right.
Investing in, let’s say, land might not be very reasonable for a business administrator or stock investor. Therefore, you need to evaluate your profession to gain the maximum profit from real estate investment.
To reach the highest level of efficiency, a business administrator can invest in commercial units, a tenant in a house, a farmer in agricultural land, and a state official can invest in improved land.
Those wondering how to start investing in real estate should first determine their purpose. Are you going to lease your house or live in it? Determining how to finance the purchase and how much you are going to pay also matters. If you have investment purposes, buying an off-plan house together with a completed project can be more profitable.
Our biggest advice to investors is that you pay half of the amount for an off-plan project of a reliable construction company, and sign the contract after agreeing on paying the rest when you receive the title deed.
For those who’ll start investing in real estate, timing is important. Short-term means 3-5 years, mid-term means 5-10 years, and long-term means 10 and more years. Based on the term of your choice, short-term land investment and long-term agricultural land investment are more reasonable.
Companies and individuals that want to construct a house in short term should buy vacant land in city centers. The zoning status, the size, shape, and location of the vacant land determine its appreciation and how easy you will sell it. Therefore, consider square or rectangular-shaped lands that will allow convenient construction.
Additionally, receive the zoning status and plan of the vacant land from the municipality and check for its hypothec status. Negotiate over its net size. Buying vacant land for a house price and giving construction right in return for a flat will earn you double the price of the land just in two years. This is a better opportunity rather than buying a high-priced house. To start investing in real estate, you need to do your research.
Know Your Budget
The advantage of buying a house with cash income is that you’ll have a stable income, which means if you lease the property, it will do all the work for you! One of its benefits is that rental prices increase every year as per the contract in line with consumer price index changes. Therefore, you are protected against inflation.
However, when you start investing in real estate, there’ll be some liabilities in addition to the capital cost.
Income tax for your rental income, property tax born arising on your behalf in the municipality where your property is, and real estate buying-selling tax that is usually paid by the buyer (in some cases shared between the buyer and seller) are among these liabilities.
To start investing in real estate, agencies might help. If you have worked with a real estate agent when buying the property, they will receive a commission equal to 3% of the buying price of the real estate.
If you start investing in real estate with a house, choose a residential area with a big population. Nobody wants to live in a place near an industrial area. Air pollution, noise level, etc. will affect the buyers’ decision.
Technologies such as using a sound wall aren’t applied by the state yet. Therefore, we don’t recommend you buy a house near a highway or a busy road. This may seem to conflict with the idea of convenient transportation, but we mean houses adjacent to the roads. Such houses will disturb the residents due to noise, which means you can’t easily find tenants.
When talking about the location, we directly think about the direction your house faces. Which one is better? To find it, evaluate the seasonal temperature of the city you live in. For instance, buyers in Adana and Erzurum will prefer different directions, which is about the east and the west.
When touring the property, use a compass application on your phone. The living room is where you’ll be spending most of your time, which is followed by the kitchen. If you’re living in a cold area, these rooms must be facing the northwest. This is not a vital point but a factor that affects your heating bills.
Pay Attention to Earthquake Regulations
Another factor is the age of the building. Buildings older than 20 years old aren’t preferred that much. Opt for buildings constructed as per the earthquake regulations particularly in risky cities like Istanbul, Elazığ, Adana, and Manisa.
Don’t buy houses constructed before the year 2000. People are more sensitive about earthquakes than you’d expect, which means you can face troubles when leasing your house.
If you’re playing the long game
To start investing in real estate, you need to consider the surroundings of the house. Social areas near your investment zone are highly important. For instance, a park within a walking distance, a lively shopping mall in proximity where the heart of the trade beats or similar facilities is vital to a house.
In the end, the tenant will not be present at the house all the time. They will go out often, and they will consider it when renting a house. However, make sure your house isn’t near a busy street due to the noise problem. Again, apartments on busy streets or in buildings that they share with cafes, discos, bars, restaurants, or wedding places are risky in the long term.
One of the most important factors you should consider is the transportation facilities. Particularly in big cities, houses near the metro, tram, Metrobus, and bus stations see more buyers.
Big cities have a traffic problem. Therefore, if your house doesn’t have a parking lot, you’d miss most of the tenants. If you tell them to park on the road when they asked you about the parking lot, they’ll most definitely leave.
Skip Basement Floors
Another piece of advice would be that skip houses on the basement floor because they are humid, their windows open to the road, they require expensive maintenance, and they are the last choice of tenants. In fact, the latest building regulation bans the construction of apartments underground, which means their days have come to an end.
Check the House
To start investing in real estate, see the property in person. Visit the house you’ll buy or rent to check the repair level they require. See if the paint is old, the walls are moldy, the doors and windows are broken. Make sure there are banisters on the balcony, the shower cabin is okay, and the flush works. Tiles shouldn’t be broken and the fillings should be in their places if you’re going to buy the house.