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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 several different varieties of real estate to invest in. It's important to consider the goal of the real estate prior to making an investment. There are 9 steps to take prior to making an investment in Real Estate.

Step 1 Make Sure You Are Ready

It is important to Consider if you're prepared to purchase Real Estate. Getting a Land Lord could be a daunting but rewarding undertaking. You'll have to be accessible 24/7 ready to fix any breakdowns that happen in a residential setting. These repairs can eat into profits. If you are handy and love to fix things, then investing in real estate may be a great fit for you. If you are not on the handy side, you can always hire someone to fix and take care of the property. You'll need to remember that you will find good and bad tenants. Some tenants are going to keep the place nice, while some have the option 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. Even though Real Estate has the potential to return your income, there is still going to be expenses and state taxes included, together with costly repairs.

Step 3 Get the Down Payment

Most investment properties Will require a bigger percentage of down payment compared to owner-occupied properties. At the minimum, 20 percent will be required because mortgage insurance is not available for Investment properties.

Step 4 Take Note of High-Interest Rates

If You Need to borrow Cash to buy 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 remember 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 Houses that need to be fixed up is comparatively low, you'll need to choose if you're able to really afford to fix the house. This also includes if you have the means and skills to fix up the house. Diving into poorly manicured homes is truly a bad idea, and can wind up being a costly money pit.

Step 7 Calculate Operating Expenses

It is important to understand The expenses of your new investment property. Use 50 percent rule when calculating. If your charging rent of $2,000 a 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 need to pay. It is best recommended to put money into a home with a value of 150,000.

Step 9 Location is Key


Finding the Perfect location Can impact your investment dramatically. Search for locations with low property taxes, excellent school districts, low crime rates, and amenities. These measures can help you consider 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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