Real estate has produced many of the richest people in the world so there are plenty of reasons to think it’s a sound investment. However, as with any project, experts accept, it’s best to be well versed before plunging in with hundreds of thousands of dollars.
Here are 4 things you should be looking into and investigating in buying a real estate.
1. Consider Your Comfort Level with Being a Landlord
This is not recommended for new buyers. But, you don’t have to remain local while you get the hang of real estate investing.
If you’re not the handy type and don’t have a lot of cash spare, being a landlord might not be the right thing for you.
2. Pay Down Personal Debt
Savvy investors might carry debt as part of their investment portfolio, but the average person should avoid it. If you have student loans, unpaid medical bills, or children who will soon attend college, this is not a choice for you to purchase a rental property.
An expert said that it is better for you to have a cash cushion.
3. Secure a Down Payment
Investment properties usually need a greater down payment than owner-occupied properties; they have more stringent criteria for approval. The 3% that you may have put down on the home where you are currently living will not be working for an investment property.
You will need at least a 20% down payment, as mortgage insurance on rental properties is not available. You may get the down payment through bank finance, such as a personal loan.
4. Buy a Low-Cost Home
The more expensive the house, the greater will be your ongoing expenses. Some experts recommend starting out in an up-and-coming neighborhood with a $150,000 home. Furthermore, experts advise never to buy on the block the nicest house for sale, the ditto for the block’s worst house.
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