Choosing The Right Investment Property
You might want to consider investing in rental properties. However, you can’t get started in real estate investing before you learn a little bit more about it. Although rental properties can bring in very interesting returns, too many people still overlook them.
Firstly, you need to find a good return. Real estate is an illiquid asset that requires you to minimize on your liquid assets. What you should look for is to get the same or similar rate of return. In other words, you want a good cash flow property, and not a property that will only cost you more money.
In terms of real estate, therefore, you should look not for appreciation but rather for cash flow. The cash flow of a property is the money you have left over from the rental price after you have paid for all the necessary bills in relation to that property. What you should do is leave your cash flow alone, and keep that as savings as much as possible. As rent prices go up, your cash flow will rise too. If you have a good mortgage construction, where your payments stay the same, this is even better. You should make sure that at least 20% of the money you get is cash flow. There are a number of free to use cash flow calculators available online and you should use these at much as possible.
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. This is due to the fact that banks will generally want you to put at least 20% down on a rental property mortgage. 20% can equate to a lot of money, particularly if you will also need to do repairs. However, when you are younger, banks are generally more lenient and understanding. Real estate investing does involve a lot of other things as well. Finding the property is an entire enterprise on its own. However, finding a property also requires a lot of analyzing and research. One of the things you will also have to do is find a realtor that represents you properly. Their goal is to make sure that you find good properties and make solid investments. 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. Do remember that it is time worth spending.