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Investing in Real Estate to Make Residual Income

There are many ways that Real estate can make people money. There are many distinct varieties of real estate to put money into. It is crucial 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's important to Consider if you are prepared to purchase Real Estate. Becoming a Land Lord can be a daunting but rewarding task. You will need to be accessible 24/7 ready to fix any breakdowns that occur in a residential setting. These repairs may eat into profits. If you're handy and love to fix things, then investing in real estate may be a good fit for you. If you are not about the handy side, you can always hire someone to fix and take care of the property. You'll have to keep in mind that you will find good and bad tenants. Some tenants will continue 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's still likely to be costs and state taxes included, together with costly repairs.

Step 3 Acquire the Down Payment

Most investment properties Will require a larger 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 have to borrow Money to buy your investment property the loan will most likely have a greater interest rate in comparison with traditional mortgage interest rates. In order 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 are 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 choose if you can really afford to fix the house. This also includes if you've got the means and expertise to fix up the home. Diving into poorly dilapidated homes is truly a bad idea, and can wind up being a pricey money pit.

Step 7 Calculate Operating Expenses

It's important to know 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 roughly $1,000 in expenses

Step 8 Look for Low-Cost Homes


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

Step 9 Location is Essential


Finding the right location Can affect your investment dramatically. Look for locations with low property taxes, excellent school districts, very low crime rates, and amenities. These steps can help you think about the ups and downs 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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