Real Estate is one investment that will NEVER be obsolete. I don’t care what is going on with the economy, people will ALWAYS need a place to live. This is why real estate is one of the better investment options compared to other investments. Real Estate can generate continuing passive income and since it usually increases in value over time, it can be used to build wealth.
Important research before investing in real estate
It is important that you prepare yourself and do your research before investing in real estate. Yes there are so many gurus out there that say you can get Real Estate Software Solutions with no money, but it just isn’t true. This myth has had many people fail before they get started. True enough you can use other people’s money, in exchange for a ridiculous interest rate or splitting 50% of the profits, but even under those circumstances, I would recommend having anywhere from $10,000 or more readily available at all times. When dealing with real estate as a business unexpected repairs or fees do come up
Cash Is King
You need to weigh the options of what funding sources to use to purchase a property. When you are able to buy a property with your own cash and not a mortgage loan, you would only be responsible for paying annual property taxes, possibly annual or monthly hoe dues and maintenance. That means most of the monthly rental income generated from the property stays in your pocket. Most people don’t have enough cash to do this, so the next best thing would be a line of credit. Hard money would be an absolute last resort. The payments are interest only, but at 10% on a $200,000 loan, you’re looking at spending $2000/month. What if you have a happenstance that puts you behind? This could then turn the investment property into a fiscal burden instead of a wealth building asset. If you fall behind on the mortgage, it could damage your credit, which will cost you more money in the long term.
Plan Out All Your Expenses
Even though some unexpected items come up and it’s hard to predict the cost, it is important that you take this into consideration when planning to buy your first property. It’s good to include an educated guesstimate of unexpected expenses when making your budget. When we buy investment property to renovate, for example, we always factor in at least $5000 for the unexpected repairs that may be needed once we open up a wall. At Premier Realty & Property Management Services, LLC, we advise our clients that the money is made up front. It’s important that you determine the profit when determining the offer you’re going to make. If you offer too much then you will risk losing your shirt. When preparing your budget, you want to factor in the cost of utilities, taxes, upkeep, repairs, trash out (if applicable), and the unexpected.
If you’re purchasing rental property, it’s good to have a property management company that can help you get the most for your money. A Property Management Firm can alleviate a lot of headaches that landlords face. Now with this covid crisis, it helps to have a Premier Property Management in Atlanta firm that can help you pre screen your tenants and even manage the property through the moratoriums and other new rules that come along with this pandemic.
If you’re purchasing land that you intend to sell at a later date, then you want to look into the property deed thoroughly. Find out whether any new roads are planned near the land you want to buy. Find out how that will affect your property value. It’s always a good idea to look at recent comparable sales in the area, and see if the area is up and coming. Take into consideration other external factors that could affect the property’s value.
Some real estate investors start by buying a duplex or a home with a finished basement, then living in one unit and renting out the other. This is a fantastic way to get your feet wet, but bear in mind you will be residing in the same building as your tenant. Additionally, when you set your budget, make sure you can cover the whole mortgage payment and live comfortably without the extra lease payments coming in during vacancy periods. As you acquire more properties, learn from different situations that occur, you will learn to develop a system that will continue to grow your wealth.