The goal of any real estate investor is to earn as much as possible with minimal risk. To achieve this, you need to be able to make smart decisions. This means you need to know the three things that make a great real estate investment.
You can easily compare rental properties to stock markets. This is because most of us understand these and know that we need to spend money to make money. However, with stocks, all we can do is hope that they increase in value. It is comparable to retirement calculators, who make a guess in terms of when we die. As a result, we may end up broke if we live slightly longer than expected.
If you use this knowledge and apply it to real estate, you need to look for cash flow rather than appreciation. Calculating your cash flow means you need to work out how much money from your rental is left after you have paid for all the necessary expenses. The best possible investment allows you to leave your cash flow untouched in a bank account somewhere. Additionally, as your rent goes up over time, so will your cash flow. This is particularly true if your mortgage payments stay the same. The best cash flow is at least 20% of your overall income from the property. Spend some time using the internet to work out exactly how much your cash flow is.
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. Banks will generally want at least a 20% deposit before giving you a mortgage. Unfortunately, 20% can be much too high, particularly if the property needs repairs as well. 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. However, finding a property also requires a lot of analyzing and research. You also need to work with a good realtor to represent your needs. They will help you to find the best properties for your needs. 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.