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Investing in Real Estate to Make Residual Income

There are many ways that Real estate may make people money. There are many different types of real estate to invest in. It is crucial to take into account the purpose of the real estate before making an investment. There are 9 steps to consider before making an investment in Real Estate.

Step 1 Make Sure You Are Ready

It is important to Consider if you're ready to purchase Real Estate. Becoming a Land Lord can be a daunting but rewarding task. You'll have to be available 24/7 ready to fix any breakdowns that happen in a residential setting. These repairs can eat into profits. If you're handy and love to fix things, then investing in real estate might be a good fit for you. If you aren't on the handy side, you can always hire someone to fix and take care of the property. You will have to keep in mind that there are good and bad tenants. Some tenants will keep the place pleasant, but some have the option to waste it out.

Step 2 Pay Down All Debts Before Earning Real Estate Investment

Make sure student loans, Medical bills, and credit card debt is well handled and paid down before considering investing in Real Estate. Even though Real Estate has the potential to return your income, there is still going to be expenses and state taxes involved, along with costly repairs.

Step 3 Acquire the Down Payment

Most investment properties Will require a bigger percentage of down payment in comparison with owner-occupied properties. At the minimum, 20 percent will likely be needed because mortgage insurance is not readily available for Investment properties.

Step 4 Take Note of High-Interest Rates

If you have to borrow Money to buy your investment property the loan will most likely have a greater interest rate compared to traditional mortgage rates of interest. To be able to make income off your investment property, you'll need to remember that the monthly loan payment will have to be lower than the rent you're charging.

Step 6 Stay Away From Fixer-Uppers


Although The price of Homes that will need to be fixed up is comparatively low, you'll need to decide if you can really afford to fix the house. This also includes in the event that you have the means and expertise to fix up the home. Diving into badly dilapidated homes is truly a bad idea, and may end up being a costly money pit.

Step 7 Calculate Operating Expenses

It's important to understand The expenses of your new investment property. Use 50 percent rule when calculating. If your charging rent of $2,000 per month then you can expect to pay around $1,000 in expenses

Step 8 Look for Low-Cost Homes


The more expensive your Investment property is, the more expenses you will have to pay. It is best recommended to invest in a house with a value of 150,000.

Step 9 Location is Essential


Finding the right location Can impact your investment dramatically. Look for locations with low property taxes, excellent school districts, low crime rates, and amenities. These steps can help you think about the pros and cons of investing in real-estate.

Works Cited:

Tim Parker Investopedia. 10 Tips for Purchasing Your First Rental Property. [Internet] 2017 [Cited 4 Dec 2017] Available from: https://www.investopedia.com/articles/investing/090815/buying-your-first-investment-property-top-10-tips.asp

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