With real estate investing, you can either be incredibly successful, or you can lose it all. As everybody knows, location, location, location is hugely important, but ensuring you deal with the right type of person is actually even more important. Unfortunately, there are some really unscrupulous people in the world of real estate. These are the ones you see on late night telly, promising you untold riches.
Try to see rental properties like a stock market. This is because most of us understand these and know that we need to spend money to make money. However, whether or not stocks will perform well simply cannot be determined properly. The same is true for retirement calculators, who simply “guess” when we will die. If the estimate is wrong and you live longer, then you will end up broke before your death.
Your investment should also be as low risk as possible. There is no such thing as risk-free real estate, but some risks are too high to take. If at all possible, avoid tenant-in-common options, fixer uppers, real estate development and private real estate funds. Invest in these options and it is unlikely that you will ever see a return. A much better idea is to title interesting properties to yourself. Naturally, this means you need to take the time to do research and analysis, and you must exert due diligence. Next, you need to find a property that doesn’t require a lot of management or time. Hence, you don’t want to invest in a holiday home, a college home or a property in a bad neighborhood for instance. What you want is a long term rental opportunity with tenants with a good credit profile. Naturally, this means you also have to be committed to being a respectful and good landlord. It is impossible to never have any problems with a property, but if you can resolve those issues quickly, this shouldn’t be too much of a problem.
Generally speaking, it is easier to get started with rental properties if you are younger, particularly if you don’t have a lot of money to put down. If a bank is to provide you a mortgage for a rental property, they will usually want you to put at least 20% down. That kind of deposit can be too expensive for many people, particularly if the property itself will need some repairs as well. However, if you are a bit younger, banks may be slightly more understanding. There are quite a few other things you need to look into. One of the things you will need to work out is which property to invest in at all. If you want to find a property, however, you need to have the time to do a lot of research and you must analyze your options. 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. Do remember that it is time worth spending.