Over the past couple of years the market value of homes have increased; it is looking like this trend will continue upward over the next few years. This type of real estate investing environment can present a great opportunity to buy an income property. But only if you are going to do it right. If you are considering getting into real estate investing review the tips below before getting in over your head.
Looking Into Your Finances
To get the most for your money it is recommended that you buy these properties outright and not have a mortgage. However, this is not always possible for most people. One way to get a deal is by looking into foreclosures which are listed below market value. If you need to take out a mortgage on the property you want to make sure you get the best rate. Keep in mind that mortgage companies will charge you more if you use this as a second home or rental from the beginning. If you are able to, consider living in the home for at least a year to save you money.
Calculating What You Will Make
You need to know how much you will make over time to know if it is worth the investment. Rental properties are a great long term investment especially when the mortgage is paid off. To find out what you will make while you still have a mortgage identify what you pay monthly for the mortgage, insurance, taxes, and some extra for maintenance. You then need to look into what other people are charging in the area and compare the two numbers to see if you will make money renting out the space. You want to make sure there is at least a few hundred dollars remaining for any unexpected costs.
Ways of Investing
If you are nervous about beginning this process on your own because of the stress and time needed to do it right there are a few other options out there for you. Real Estate Investment Trusts (or REITS), allow you to fund the investment property without having to take care of all the day-to-day responsibilities. Over the last few years REITS have performed very well in comparison to other investment strategies. They do not take the risk out of real estate investing but REITs can make it a little easier on the investor.
No matter which path you choose when beginning your real estate investing you need to be completely prepared for many outcomes. Make sure you stay up-to-date with the real estate market to help ensure the best outcome and do your research to put you and your investment in the best possible situation to succeed.