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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 is important to take into account the goal of the real estate before making an investment. There are 9 steps to consider 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 purchase Real Estate. Getting a Land Lord can be a daunting but rewarding undertaking. You'll need to be accessible 24/7 prepared to fix 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 might be a great fit for you. If you aren't about the handy side, you can always hire someone to fix and maintain the property. You'll have to keep in mind that there are good and bad renters. Some renters will keep the place nice, but others 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 considering investing in Real Estate. Although Real Estate has the capacity to return your income, there is still going to be costs and state taxes included, together with costly repairs.

Step 3 Acquire 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 likely be needed because mortgage insurance isn't readily available for Investment properties.

Step 4 Take Note of High-Interest Rates

If You Need to borrow Money to purchase your investment property the loan will most likely have a much higher interest rate in comparison with traditional mortgage interest rates. To be able 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're charging.

Step 6 Stay Away From Fixer-Uppers


Although the Cost of Homes which need to be repaired is relatively low, you'll have to choose whether you can really afford to fix the house. This also includes in the event that you've got the means and expertise to fix up the house. Diving into badly dilapidated homes is truly a bad idea, and may end 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 per cent rule when calculating. In the event the charging rent of $2,000 a month then you can expect to pay roughly $1,000 in costs

Step 8 Appear 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 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 steps 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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