Real estate investing can be very risky, but it can also be highly lucrative. Yes, location, location, location is hugely important, but so who you are dealing with is even more important. Unfortunately, there are some really unscrupulous people in the world of real estate. These are the ones you see on late night telly, promising you untold riches.
The first thing is to find something with a good return on investment. Real estate is an illiquid asset that requires you to minimize on your liquid assets. Try to make sure that the return rate you get is the same as what it was on your liquid assets. This means that you should find a true cash flow property, and not a money pit.
In terms of real estate, therefore, you should look not for appreciation but rather for cash flow. Cash flow is what actually comes into your bank account from your rental properties after you have met your financial obligations. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Your cash flow will also go up as rent prices go up. If your mortgage payments stay the same, then your cash flow will be even better. The best cash flow is at least 20% of your overall income from the property. There are some great online resources in terms of calculating your cash flow.
If you don’t have a lot of money to put down, you will find that it is easier to invest in rental properties if you are younger. If a bank is to provide you a mortgage for a rental property, they will usually want you to put at least 20% down. 20% can equate to a lot of money, particularly if you will also need to do repairs. However, those who are younger can often get better deals on mortgages, as they have longer to pay them back. Real estate investing does involve a lot of other things as well. One of the things you will need to work out is which property to invest in at all. If you want to find a property, however, you need to have the time to do a lot of research and you must analyze your options. You also need to spend some time looking for a realtor that can represent your interest. Their goal is to make sure that you find good properties and make solid investments. You will then need to look into what it means to be a good landlord, something that will take a considerable amount of time to learn. Do remember that it is time worth spending.