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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 types of real estate to put money into. It is important to take into account 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 ready to invest in Real Estate. Becoming a Land Lord can be a daunting but rewarding task. You will need 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 are not about the handy side, you could always hire someone to fix and maintain the property. You will have to keep in mind that there are good and bad renters. Some renters are going to keep the place nice, while others have the option to waste it out.

Step 2 Pay Down All Debts Before Making Real Estate Investment

Ensure student loans, Medical bills, and credit card debt is well managed and paid down before considering investing in Real Estate. Even though Real Estate has the potential to return your income, there's still going to be expenses and state taxes involved, 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 purchase your investment property the loan will more than likely have a greater interest rate in comparison with traditional mortgage rates of interest. To be able to make income off your investment property, you will have to keep in mind that the monthly loan payment will have 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 comparatively low, you'll have to decide if you're able to really afford to fix the house. This also includes if you have the means and expertise to fix up the home. Diving into badly dilapidated homes is really a bad idea, and can end up being a costly money pit.

Step 7 Allergic Running Expenses

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

Step 8 Look for Low-Cost Homes


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

Step 9 Location is Key


Finding the right location Can affect your investment dramatically. Look 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 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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