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Investing in Real Estate to Make Residual Income

There are many ways which Real estate can make people money. There are many different varieties of real estate to invest in. It's important to consider the purpose of the real estate before making an investment. There are 9 steps to consider prior to making an investment in Real Estate.

Step 1 Make Sure You're Ready

It is important to Consider if you are ready to purchase Real Estate. Getting a Land Lord can be a daunting but rewarding undertaking. You'll need to be available 24/7 prepared to fix any breakdowns that happen in a residential setting. These repairs may eat into profits. If you are handy and love to fix things, then investing in real estate might be a great fit for you. If you are not on the handy side, you could always hire someone to fix and maintain the property. You will have to remember that there are good and bad tenants. Some tenants will keep the place pleasant, but some have the choice to waste it out.

Step 2 Pay Down All Debts Before Making Real Estate Investment

Make sure student loans, Medical bills, and credit card debt is well handled and paid down before thinking about investing in Real Estate. Although Real Estate has the potential to return your income, there is still going to be expenses and state taxes involved, together 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. In the minimum, 20 percent will be required because mortgage insurance isn't available for Investment properties.

Step 4 Take Notice of High-Interest Rates

If you have to borrow Money to purchase your investment property the loan will more than likely have a much higher interest rate compared to traditional mortgage rates of interest. To be able to make income off your investment property, you'll need to keep in mind that the monthly loan payment will need to be lower than the rent you're charging.

Step 6 Stay Away From Fixer-Uppers


Although the Cost of Homes that will need to be repaired is comparatively low, you'll need to choose if you can really afford to fix the house. This also includes in the event that you've got the means and skills to fix up the house. Diving into badly dilapidated homes is really a bad idea, and may wind up being a costly money pit.

Step 7 Calculate Operating Expenses

It is important to know The expenses of your new investment property. Use 50 percent rule when calculating. In the event the charging rent of $2,000 per month then you can expect to pay roughly $1,000 in expenses

Step 8 Appear for Low-Cost Homes


The more expensive your Investment property is, the more expenses you will need to pay. It's best recommended to put money into a house with a value of 150,000.

Step 9 Location is Key


Finding the Perfect location Can impact your investment dramatically. Look for locations with low property taxes, good school districts, very 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 buying 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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