Top Factors To Consider Before Investing In Real Estate

Investing in Real Estate to Make Residual Income

There are many ways that Real estate can make people money. There are many different varieties 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 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. Getting a Land Lord can be a daunting but rewarding task. You will need 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 are not about the handy side, you could always hire someone to fix and maintain the property. You will have to remember that there are good and bad renters. Some tenants will continue to keep the place pleasant, 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 capacity to return your income, there's still going to be expenses and state taxes included, along with costly repairs.

Step 3 Acquire the Down Payment

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

Step 4 Take Note of High-Interest Rates

If you have to borrow Cash to purchase your investment property the loan will more than likely have a much higher interest rate compared to traditional mortgage rates of interest. In order to generate income off your investment property, you will have 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 price of Houses which will need to be fixed up is relatively low, you will have to choose if you're able to 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 really a bad idea, and may end up being a costly money pit.

Step 7 Calculate Operating Expenses

It's important to understand The expenses of your new investment property. Use 50 per cent rule when calculating. If your charging rent of $2,000 a month then you can expect to pay around $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 home with a worth of 150,000.

Step 9 Location is Key


Finding the Perfect location Can affect your investment dramatically. Search for locations with low property taxes, excellent school districts, 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 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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