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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 distinct types of real estate to put money into. It's important to consider the purpose of the real estate prior to making an investment. There are 9 steps to consider before making an investment in Real Estate.

Step 1 Make Sure You're Ready

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

Step 3 Acquire the Down Payment

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

Step 4 Take Note of High-Interest Rates

If You Need to borrow Money to buy your investment property the loan will most likely have a much higher interest rate in comparison with traditional mortgage rates of interest. To be able to generate income off your investment property, you will 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 Houses which will need to be repaired is relatively low, you'll need to decide whether you can really afford to fix the house. This also includes if you've got the means and skills to fix up the home. Diving into badly dilapidated homes is truly a bad idea, and can wind up being a costly money pit.

Step 7 Calculate Operating Expenses

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

Measure 8 Look for Low-Cost Homes


The more expensive your Investment property is, the more expenses you'll need 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. Search for locations with low property taxes, good school districts, very low crime rates, and amenities. These measures 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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