6 Smart Tips for Investing in Real Estate in 2018

The stock markets are on an unprecedented bull run and if this trend continues up to July, this will officially be the longest bull run in stock market history. So, should you invest in stock markets now?

The answer is an overwhelming no because the markets are due for a correction anytime now. So, is the case with the bond market as the interest rates are rising. Bitcoin is a tempting investment, but one that also comes with a huge risk as many people are seeing it as a financial bubble inflated by mass madness.

All this leaves real estate as the best and the safest form of investment in 2018, according to Joseph Allaham, an established restaurateur and the founder of Allaham Consulting, a real estate consulting firm in NYC.

Here are some smart tips he shared with me that can help you get the most returns for your money.

1. Set SMART goals

Setting SMART goals is the trend in the business world, so it’s no surprise that it is relevant in the real-estate industry too. Joseph Allaham says your goals should be specific. You should say something like, “I want to buy a single family home in Miami within 24 months, so that the rent will cover my monthly mortgage expenses.”

It must be measurable, which means, you should be able to say that the value of your property should increase by a certain percent within the next year. Of course, these goals should be attainable and realistic, so your expectation should be reasonable and based on the prevailing industry returns. Lastly, you should have a time frame for your goal. 

When you set such SMART goals, you’ll buy the right property.

2. Use tax to your advantage

You can save tax in many ways, ranging from depreciation to mortgage interest deduction and more. Consider investing through qualified plans like HSA and ESA to save money on your taxes.

Even better, Allaham says to plan a strategy with your accountant, so you can save every possible dollar and yet, make the most of your investment.

Understand your local tax laws and regulations and use it to your advantage.

3. Equity loans

Equity loans are making a comeback now, so consider using them for your real-estate investment. You get double benefit in the form of asset protection and liquidity.

For example, when you use HELOC to buy a property, you don’t spend your personal money and at the same time, you get better protection for your asset. According to Allaham, this is how you can have cash in your hand, a property in your name and protection for it – a triple treat!

4. Assets should pay for your liabilities

Imagine if your liabilities are paid through the income from your assets? You’ll get financial flexibility to use your money for other expenses.

Well, Joseph Allaham says this strategy is the cornerstone of real-estate investing. “While buying, you should choose a property that will generate enough revenue to pay your mortgage expenses, so at the end of the mortgage, you’ll have a property in your name without ever having to pay a penny from your monthly income,” he advised.

5. Discipline is the key

Allaham says focus and discipline are important in real-estate investing. Have a budget and make sure you stick to it. Though there could be variations between your investment and the cost, it’s important you don’t allow your whims and fancies to overshoot your budget.

“Also, work on things like time management, negotiations and reading, so it can help you get the best deal for your money,” he added.

In all, real estate is the place to park your funds in 2018 and I hope the above tips help you to get the best returns.