What to know before you invest in real estate

Are you planning to invest in commercial real estate in Texas? This can be a lucrative but also complex affair. The key to success will be to know in advance what your goals are. You can then plan out how you intend to meet them by keeping a number of factors in mind.

What questions should you ask before investing?

Before you invest in real estate, you need to ask yourself a number of questions. The first concerns what you expect to get out of the deal and the return on your initial investment. Are you looking for a property that will generate quick cash flow? Or do you prefer a property whose value will continue to grow over time?

If you invest primarily for cash flow, you can collect in several forms. The most common will be rent. You can assure yourself of a reliable monthly income by this means. If you’re investing for the purpose of appreciation, you can expect less in the short term. However, a sale in several years can bring major rewards.

Do you need money now or later?

Before you invest in property, you need to consider the potential payoff. Is your goal to stay liquid with your investment? If so, a rental property will most likely be the best fit for your needs. If you are able to hold out for a long amount of time, an appreciating property will be ideal.

You need to consider your ultimate tolerance for risk. If the market for real estate in Austin is flat for some months, for example, can you survive until it recovers? The amount of money you put into a property should never be more than what you have in reserve.