Considering Real Estate Investing?
It may seem like the perfect time to buy real estate because market value continues to rise. But if you don’t buy smart it can be a very poor decision. Before going down the real estate investing track, make sure you do your research and think about these options before your big purchase.
Finances First
You want to make sure that your finances are set before buying a second property. Although buying a home with cash is the best way to make your money back fast, not everyone has that kind of money sitting around. It is important to make sure you are able to get the best deal while making the most money back. One way you can do this is by purchasing a foreclosure. These homes are generally listed below market value allowing you to pay less for the home. The next thing you will need to think about is taking out a mortgage. Mortgage companies can charge you more if this is your second home or rental property because they don’t need to give you the residency break. To avoid this cost think about living in the property for a year. In some cases just living there for a year allows you to keep the break for the remainder of the mortgage.
Will You Make Money
You need to know how much money you will make from this investment. Rentals are a great way to make money over time compared to flipping homes which can make you money quickly but can also be considered risky. If your mortgage is already payed off you will be making money from the start. If it is not, you can still make money in this competitive rental market. Calculate how much your mortgage, taxes, maintenance, and insurance is monthly. Next look into how much people are charging for spaces like yours around you. Take the difference of these two numbers; if you are in the black after this math you would be making money monthly.
Investing For You
What goes into having a rental property can be nerve racking and overwhelming to do on your own. If this is the case look into Real Estate Investment Trusts, REITs. These companies have seen a 13% appreciation increase over the last twenty years. They take care of the day-to-day maintenance for you. There are still some risks involved with this strategy so make sure you consider all of the pros and cons.
Real estate investing is a great way for you to make money as long as you do it right. Before jumping in, make sure you consider the day-to-day tasks alongside the big picture strategies and the long term benefits.