For those who have been sitting on the sidelines the past few years watching the housing market recover and wondering whether or not to invest in real estate, it’s a good thing to take your time. There’s no reason to make any rash decision, real estate or 5 ways to know you're ready to invest in real estateotherwise.

For those who have already bought their first investment property, either to keep for the rental income or to buy, fix and flip, they too had their own level of anticipation. It’s natural to weigh the pros and cons but at some point it’s time to jump right in. How do you know you’re ready?

Tepid Returns

Real estate investors who buy distressed property, rehabilitate and sell for a quick profit, find their profits far exceed anything they’re getting with other investments such as their 401(k) or mutual fund. If you’re an investor who looks at an investment portfolio and wishing for more income, then real estate is right for you.

Liquidity

You need to have funds available in a liquid account reserved for real estate. Finding profitable investment property is a science and takes research before the right deal presents itself. The only timetable with real estate investment is when the opportunity arises. You never know when a prospective purchase shows up so you need to have cash on hand to act quickly, either as a down payment for financing or paying cash outright.

Credit

If you have good credit, then you’re a candidate. Financing rental properties for the long term means qualifying for conventional mortgages. Those with less than stellar credit will find qualifying for a home loan difficult.

Flexibility

Don’t become fixated on a specific property type. Real estate is as varied as any staple and the point is profitability, not property. Real estate investors are just as open to buying a duplex as they are participating in an apartment deal.

Teammates

If you haven’t consulted a real estate agent, contractors and an attorney or settlement agent before buying, don’t make a move until you surround yourself with those that have the experience you need. There are too many hidden pitfalls for the rookie investor which can boot you out of the real estate investment market in a hurry. Take advantage of the experience of those already in the industry.