Real estate investing can be very risky, but it can also be highly lucrative. Everybody believes that location, location, location is what matters the most, but it is actually more important to know who you are dealing with. However, the world of real estate is filled with shady characters. 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 require you to take money out of your liquid assets. You need to make sure that the rate of return you get is similar to the one you were getting through liquid investments. In other words, you want a good cash flow property, and not a property that will only cost you more money.
Applying this to real estate investment, what you are looking for is not appreciation, but rather cash flow. Cash flow is what actually comes into your bank account from your rental properties after you have met your financial obligations. If you can, try to leave your cash flow alone in a bank account to create significant savings. Plus, your cash flow can increase as rent prices go up over time. This is particularly true if your mortgage payments stay the same. You should be looking at a cash flow of at least 20%. There are some great online resources in terms of calculating your cash flow.
If you don’t have a lot of money to invest in a property yourself, it is easier to get started in this world if you are still young. This is because banks usually want at least 20% as a down payment before agreeing on a mortgage. 20% can equate to a lot of money, particularly if you will also need to do repairs. However, if you are a bit younger, banks may be slightly more understanding. 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. Finding a property involves a whole lot of research and analysis as well. You also need to spend some time looking for a realtor that can represent your interest. Thanks to their help, you should be able to find properties of interest. Once you have found a property, you will need to go through the process of actually becoming a landlord, which also takes a lot of training and research. However, do always remember that it is absolutely worth spending this time.