The majority of millionaires made their money by investing in real estate. It’s a tangible asset and offers amazing tax benefits.
As with any investment, there’s risk involved. It’s in your best interest to learn all you can from successful real estate moguls before diving in. Going in prepared gives you your best chance for success.
Are you considering getting into the exciting world of real estate investment? Keep reading to learn some real estate investment tips to help you get started.
What Are Your Goals?
Before you make your first real estate investment, define your goals. Do you need cash flow right now or are you doing this to boost your retirement fund? When do you plan to retire? Are you hoping to make money for your kids’ college fund? Are you looking for tax breaks?
Location, Location, Location
These are the three most important things to consider when buying a property. Choose a property in either a stable or up-and-coming area. Look for places with revitalization plans. Avoid areas where the population is declining or is suffering from high unemployment.
Do your homework. Check out the school district, the property taxes, crime rates, access to public transportation, and amenities.
Have Cash for the Downpayment
With the different loan options available, you can buy a home with 3% down if you are going to live in that home. Loans for investment properties have stricter approval requirements and require at least 20% down.
Mortgage insurance or PMI is not available for rental property loans, so 20% is the smallest downpayment allowed.
Consider Real Estate Investment Trusts (REITs)
This is a way to get into real estate investing without buying physical real estate. You invest in companies that own commercial real estate. These companies own things like office buildings, hotels, apartment buildings, and retail spaces.
While you will not get regular income from this type of investment, you will receive dividends. REITs usually pay high dividends so it’s a smart investment for retirement funds.
Plan for Unexpected Costs
You know that you’ll have regular maintenance costs on any property you own. You have to keep that in the back of your mind when setting a rental price. You also need to remember that emergencies can pop up at any time.
A broken pipe, a fallen tree, a weather event like a tornado or hurricane can wreak havoc on the home. Plan to save about 25% of your rental income each month for a repair fund.
Do you want to know more about the different types of real estate investment? Be sure to check out this post.
Which Real Estate Investment Tips Will You Follow?
Now that you have some real estate investment tips under your belt, are you ready to start buying property? Be sure to invest in property that will give you a good return on your investment.
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