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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 distinct types of real estate to put money into. It is important to take into account the purpose of the real estate prior to making an investment. There are 9 steps to consider before making an investment in Real Estate.

Step 1 Make Sure You're Ready

It is important to Consider if you're prepared to invest in Real Estate. Becoming a Land Lord can be a daunting but rewarding task. You'll need to be accessible 24/7 ready to repair any breakdowns that happen in a residential setting. These repairs may eat into profits. If you're handy and want to fix things, then investing in real estate may be a good fit for you. If you are not about the handy side, you could always hire someone to fix and maintain the property. You'll have to remember that there are good and bad renters. Some tenants are going to keep the place nice, while others have the choice 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 managed and paid down before considering 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, together with costly repairs.

Step 3 Get the Down Payment

Most investment properties Will require a larger percentage of down payment compared to owner-occupied properties. In the minimum, 20 percent will likely be required because mortgage insurance is not available for Investment properties.

Step 4 Take Note of High-Interest Rates

If You Need to borrow Money to buy your investment property the loan will more than likely have a much higher interest rate compared to traditional mortgage interest rates. In order to generate income off your investment property, you'll have to remember that the monthly loan payment will have to be lower than the rent you are charging.

Step 6 Stay Away from Fixer-Uppers


Although The price of Homes which will need to be repaired is relatively low, you'll need to choose if you can really afford to fix the home. This also includes if you have the means and skills to fix up the house. Diving into poorly dilapidated homes is truly a bad idea, and may wind up being a costly money pit.

Step 7 Allergic Running Expenses

It is important to know The expenses of your new investment property. Use 50 percent rule when calculating. In the event the charging rent of $2,000 a month then you can expect to pay roughly $1,000 in expenses

Measure 8 Look for Low-Cost Homes


The more expensive your Investment property is, the more expenses you will need to pay. It is best recommended to put money into a house with a value of 150,000.

Step 9 Location is Essential


Finding the Perfect location Can impact your investment dramatically. Look 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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