Making the decision to invest in real estate in any market is a big one, but as the market continues to improve across the country, investing in real estate in Richmond, VA should actually be pretty easy. As it turns out, real estate in Richmond is a hot commodity right now, with many indications that it’s only going to continue to grow.
But while investing in real estate in Richmond should be an easy decision, there are a few things you will need to consider. Below, we’ll discuss five steps to take before jumping into the Richmond, VA real estate investing game.
Decide What Your Investing Goals Are
The first step in beginning your investment journey in real estate in Richmond is deciding what your actual investment goals are. Taking a good, long look at your objectives will help you to determine what types of investments you should consider and which path you should ultimately take. Are you interested in a “get rich quick” plan where you’re almost immediately on track for seeing huge returns in the bank (spoiler alert: this is probably everyone’s dream, but it isn’t really feasible unless you’ve already got a huge amount of money to invest), or are you interested in padding your bank account a little bit with more modest returns? Is this investment plan something that you anticipate seeing yourself through the long-haul and being a constant source of revenue for you and your family as you head into your retirement years, or is this going to be a one-and-done type of deal just to build up your nest egg?
Review Your Investing Options
Once you’ve decided on your ultimate investing goals, it’s time to establish just how you’re going to get there. To break it down into the simplest terms, there are two types of investing when it comes to real estate: active and passive. With active investing you’re - well, active. You’re purchasing properties, managing construction projects, and collecting monthly rents. You’re doing the work, and the reward is that you hopefully see a return on the sale of the property or consistent rental income.
With passive income, you’re doing far less of the work or in some cases, such as with Walnut Street Finance, none at all. You simply invest your funds with a reputable investment company and they in turn handle all of the heavy lifting by lending to borrowers who have big, profitable plans for your funds. As you can see, these are two vastly different options, suited to two vastly different personality types. For those that like to have hands-on control - or who are looking for a project to keep them busy, active investing is the method for them, whereas for those looking to simply create a revenue stream while they kick back and relax, passive investing is the way to go.
Do Your Due Diligence on the Local Market
As it turns out, one of the reasons why investing in real estate in Richmond is a great idea right now is that Richmond is a very competitive market for fix-and-flips, as well as for new construction. This means that whether you’re opting to take the active or passive route, there should be plenty of opportunities for your funds to provide you with a reliable return on your investment. When you’re taking a look at your investment options, decide whether it’s something that’s feasible in your local market. If your local market isn’t ideal for investing, it may be best to work with a partner that invests in strong markets or that has experience investing in up-and-coming areas with a proven track record of achieving returns for their investors.
Research Investing Partners
Whether you’ve decided to go the active route or the passive route, at some point in your process you’re going to need investment partners. After all, even the handiest of all contractors can’t complete all phases of construction on their own. When you’re selecting who to work with, be sure you ask them about their track records in terms of completing projects on time and on budget, and request proof of licensing and insurance when applicable.
If you’ve decided to go the passive route, you’ll also want to ask to see proof of returns for clients, including quarterly or annual statements and disclosures. Any company worth its salt will be happy to hand over information that proves they’re being transparent and doing everything on the up-and-up. Of course they probably won’t be able to give you names of other individuals who have invested with or borrowed from them, but they should be able to show you properties that their funds have helped rehab, and give you an idea of what the property sold or what type of income it’s generating.
Decide To Move Forward and Reap The Rewards!
Finally, the last step is to simply go for it! You’ve made the decision, you’ve done your research, and now it’s time to make your move. Of course, having made the decision to begin investing in real estate in Richmond doesn’t mean it’s going to happen overnight - you’ve probably got some planning to do now (especially if you’ve chosen to be an active investor), but regardless - you are on the track to creating a new revenue stream and increasing your wealth. Congrats!
For more information on Walnut Street Finance and our investment process, read our Executive Summary.