Open HouseAccording to RealtyShares, investments in real estate have performed better than the stock market since 2000 by about 2-to-1 with returns of 10.71 annually, as compared to the S&P 500 Index with its 5.43 percent annual total return.

Of course, whether you live in Virginia or California, real estate investing is something that can be complex, though it’s also simple at the same time. The end goal is to buy property, allow it to appreciate over time and then cash out making a profit later. Going from someone who owns real estate to someone who strategically invests, however, does require a bit more legwork if you hope to maximize returns. Keeping this real estate investment checklist in mind.

Gather Documents and Meet with a Mortgage Broker or Bank Lender

Just like you would when buying a home in which to live, you’ll need lots of financial documents as part of the mortgage application process. If you haven’t looked at your credit recently, request your scores and reports from the big three reporting agencies: TransUnion, Experian and Equifax. If you notice any errors, get them corrected before applying to improve your credit scores. Gather together your tax returns and W-2s from the past two years as well as any current pay stubs and bank statements.

Based on your credit score and income, your mortgage broker or banker can help determine how much financing you’ll be eligible to receive. Once you know, you can set your budget accordingly.

Determine the Best Areas to Buy

Do your homework to determine the best places to buy, conducting market research that will help you forecast demand in the future. Where are the up-and-coming neighborhoods? You’ll want a location that’s both affordable and a good investment choice. Is the community near services that can increase desirability, such as shopping, dining, employment and healthcare facilities? Are there good schools nearby? Is public transportation accessible? How’s the livability – are yards well-kept, streets lined with trees, or is it unkempt?

Keep a Close Eye on Economic Trends

Playing close attention to rental activities and economic trends in the area you hope to invest in will help you know when it’s the right time to buy.

Choosing the Right Property

Focus on the total purchase price, potential rental income and profits without letting yourself get emotionally invested – remember, you won’t be living there. Make sure you know how much you’ll be able to get for rent on potential properties by looking at other rentals in the area. Distressed properties that have been returned to lenders following foreclosures can make for a great deal.

Making the Offer

Once you’ve found the place you want to buy and have gotten approval from your lender, it’s time to make the offer. Ideally, you should consult with a property agent who will be able to negotiate on your behalf, as it’s a skill that takes a lot of experience to acquire. Otherwise you might end up on the losing end of a deal. It’s often worth the fee to get a better price.