Confidently investing in today’s real estate market is easier said than done. Market fluctuations, supply and demand, ever-changing interest rates, and complex economic factors all play a part. However, these factors are just the tip of the iceberg concerning investing successfully.
According to Destiny Davis, research, analysis, portfolio diversification, and more are similarly critical when venturing into real estate for the first time. Davis is the president of JF Real Estate Investment Group. With that, the seasoned professional is in the perfect position to share an expert insight into the current landscape.
The following is a closer look at her top thoughts and strategies for investing in real estate in 2023 and beyond.
Table of Contents
Real Estate Market Basics
As with entering into any new field, combined research and analysis are crucial to staying informed of past, present, and forecast trends surrounding supply, demand, interest rates, and, in this instance, other real estate-centered factors. This research and analysis will invariably prove fundamental in subsequent decision-making processes. Therefore, investors mustn’t overlook it.
Now more so than ever, diversification is increasingly central to many successful real estate investors’ efforts. A diverse portfolio—including a combination of commercial, residential, vacation, or other properties—ensures an added degree of risk mitigation and should help bolster year-round returns.
Location, too, is vital. That means accounting for local employment centers, transport links, and other amenities. For residential properties, schools are similarly crucial. It’s precisely this degree of focus on research and analysis that keeps seasoned investors ahead of the game and allows them to identify areas with high future potential.
Kickstarting Your Journey
So, with the basics of the real estate market covered, what next? Destiny Davis believes that achieving early success as a newcomer to real estate investment requires an early kickstart. According to the property expert and JF Real Estate Investment Group president, two of the best ways to do this are through networking and establishing a sense of business-mindedness.
Networking is a massive part of the success of many high-profile real estate investors. Of course, building a network can take time and isn’t something that anyone should rush. However, once in place, a solid network—ideally one that includes fellow investors, agents, lenders, and other real estate sector professionals—can produce a lifetime of results.
For those just starting out, Davis recommends attending industry conferences and joining local real estate groups and organizations to establish an initial network. Meanwhile, any successful real estate investor requires an excellent degree of business-mindedness.
Business-mindedness allows investors to spot emerging business trends that others may miss. Simply anticipating changing interest rates and spotting associated economic clues can be hugely beneficial, allowing savvy investors to secure the best deals during periods of low interest rates and other optimal buying windows.
Investment Goals and Strategies
Before parting with their hard-earned money, any real estate investor—whether a newcomer or a seasoned professional—must firmly outline their goals and the strategies necessary to meet them. That includes determining risk factors, choosing a property type or types, and setting a carefully considered budget.
Assessing risk factors again calls for close research and analysis, particularly surrounding current market conditions. Account for economic indicators, first and foremost, as well as recent market fluctuations. Investors must also ensure their own finances are squarely in order before proceeding. Up-to-date balance sheets, income figures, and cash flow statements are all vital.
A thorough risk assessment and further analysis of current market conditions should help determine the best property type to invest in. As we’ve already learned, location is vital. The same is true of determining the long-term outlook for different classes of properties in distinct areas. Again, a diverse portfolio further ensures the likelihood of a successful investment.
Setting a Realistic Budget
Lastly, it’s time to set a budget. Destiny Davis says it’s imperative to know precisely where you stand regarding your financial situation before setting clear funding goals based on resale, rental, or other revenue expectations. Set these goals according to the required short- and long-term gains. Fully consider your personal risk tolerance before signing on the dotted line.
Any budget must, of course, be realistic. Tailor investments accordingly and, ideally, maintain a level of contingency for any unexpected eventualities, especially at the outset. When it comes to finalizing contracts, having conducted the necessary and appropriately thorough property searches, always remember to negotiate the best terms and be prepared to walk away if you’re not 100 percent happy.
