Investing in real estate seems like the most stable way of making money and earning an income that will ensure a comfortable retirement, but, as with anything, delving into real estate does have its share of risks. It’s essential to ensure success by following some common sense rules and doing your due diligence in choosing properties for your investments. Even once that first step has been taken, making certain you make your investment back and turn a profit can be tricky.
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Three Things To Look For In Your First Real Estate Venture
Cash On Cash – One of the first concerns in choosing to invest in real estate is to make sure you’re aren’t losing money on the initial investment. Many people look to the real estate return on investment without considering the journey it takes to get there. For starters, where is the money coming from? If you’re drawing on money already invested in stocks, bonds, or funds, you’ll want to look at the rate of return you’re already earning and compare that to your probable return on investment on the real estate property. If it’s a lesser value, you might want to reconsider the property and look elsewhere.
Avoid Lengthy Projects – While the idea of buying a fixer-upper or land for development seems like guaranteed ways to double or even triple your money, these investments are fraught with problems. Any manner of unseen expenses can crop up and reduce your profit in the long run. Instead, it may be better to consider an investment property that has already established its value.
Will It Cost You More Time Than Money? – When looking for a good investment, it’s necessary to also look at the long term obligations that might be required. Even after any required remodeling has been done, consider whether or not you will have to maintain a presence on site to look after tenants or make repairs. A property in a problem area may also pose security issues that will make ownership undesirable.
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