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Investing in Real Estate to Make Residual Income

There are many ways which Real estate may make people money. There are many distinct types of real estate to invest in. It is important to consider the purpose of the real estate before 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 are prepared to invest in Real Estate. Becoming a Land Lord could be a daunting but rewarding undertaking. You will have to be accessible 24/7 ready to repair any breakdowns that occur in a residential setting. These repairs can eat into profits. If you are handy and want to fix things, then investing in real estate may be a great fit for you. If you aren't about the handy side, you can always hire someone to fix and take care of the property. You will need to remember that you will find good and bad tenants. Some tenants are going to continue to keep the place pleasant, but 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 managed and paid down before thinking about investing in Real Estate. Although Real Estate has the capacity to return your income, there's still going to be costs and state taxes involved, together with costly repairs.

Step 3 Get the Down Payment

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

Step 4 Take Notice of High-Interest Rates

If You Need to borrow Money to buy your investment property the loan will more than likely have a greater interest rate compared to traditional mortgage rates of interest. In order to generate 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 Homes that will need to be fixed up is relatively low, you'll need to decide whether you can really afford to fix the home. This also includes if you've got the means and expertise to fix up the house. Diving into poorly dilapidated homes is truly a bad idea, and may end up being a pricey money pit.

Step 7 Calculate Operating Expenses

It is 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 roughly $1,000 in expenses

Measure 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 house with a worth of 150,000.

Step 9 Location is Key


Finding the Perfect 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 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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