Investing in real estate can have a very good return, especially as a long term investment. If you’re considering investing in real estate for the very first time, here are some tips to consider in your initial stages of research.
- How much can you afford? First find out from your bank or mortgage broker how much money you can responsibly afford for your real estate investment.
- Research areas to invest in. Do a lot of research on your own about areas with good rental potential. For example, areas with a good walking score or that are close to key things such as public transportation or schools, may be easier to find tenants.
- Consider cash flow. It’s best to find a property that generates a positive cash flow or break even at the least. This means the rent that you get from your tenants should be enough to cover the mortgage payment, property taxes, utilities and insurance. Then, budget for a little extra cushion to pay for repairs that will come up.
- Find an agent experienced in income properties. Find a real estate agent that is experienced in finding income properties and is someone you can trust to provide you sound investment advice. Finding an agent that invests in real estate themselves, is also a good idea. They will have first hand knowledge about what real estate investing entails.
- Think about getting a property manager. If you’re worried about managing the property after making your purchase, consider hiring an experienced property manager to help you find the right tenants and to deal with ongoing maintenance of the property. While this service does cost a monthly fee, it could be worthwhile to have someone manage the property and tenants for you so you don’t have to worry.