in real estate can be far more lucrative and rewarding than other forms
of investments, but before deciding if this is a career you’d like to
get involved in, it may be helpful to ask yourself the following
I prepared to make a long-term commitment (at least 3 years)?
I have the capital or funding to:
a down payment
purchasing expenses, such as lawyer’s fees, taxes, and
adjustment costs. (If you are not able to gather enough money
for these expenses, you may be able to find a family member or
financial partner to help you with your financing. This is
called “Joint Venturing”.)
I going to manage the properties myself, or will I hire someone?
I willing to educate myself and do all the necessary research?
I still be able to sleep at night, or am I going to worry over every
most common type of real estate investment involves the purchase of
rental housing. Condos, townhouses, single family residences, and
duplexes, all the way up to multi-family housing units, can all bring
you a positive cash flow and increase the equity in your
running wild and looking at every property on the market, save yourself
some time and energy by performing this simple calculation: Analyze what
the current rents are for a particular type of property, and calculate
the yearly rent. Divide this number by the purchase price of the house.
If the result if higher than 8%, this property may be worth looking at
example: If the average rent for a single family dwelling in
your neighborhood is $750, the yearly rent will be $9000. Now say you
think you can buy the house for 100,000. Divide yearly rent ($9000) by
purchase price ($100,000) and you will get an answer of .09, or
going to view a property that meets the 8% rule, you must calculate all
the monthly expenses. (Some items are paid yearly, such as insurance and
taxes. Divide by 12 to get the monthly total. )
a list of expenses to consider:
(unless you will require your tenant to pay them)
(usually 5 – 10% of monthly rent)
allowance (usually 10% of monthly rent)
fees, if applicable
management fees, if applicable
comparing the total expenses with the monthly income, you will be able
to see if you can put any money in your pocket each month.
you have decided that you’d like to go ahead with the purchase of this
investment, and you think you may want to eventually purchase a number
of properties, it is beneficial to have a team of professionals to
assist and advise you. You will need a realtor, a mortgage broker, a
lawyer or notary public, an account, an insurance broker, a home
inspector, and possibly an appraiser.
income that an investment property provides is not limited to the
monthly cash flow. Consider that each time you make a mortgage payment,
you are in fact paying yourself. (A mortgage is like an enforced savings
plan.) Don’t forget that the interest on your mortgage is tax
deductible. You can also find out from a realtor the average yearly
increase in the value of properties in your community. The banks are
usually quite willing to give you a line of credit once your property
has gone up in value, to allow you to purchase more real estate.
estate investing can be beautiful! Not many careers will pay you even
while you’re sleeping. Not many jobs will allow you to set the
schedule that works best for you. And few other jobs can be as
financially rewarding. After all, according to statistics, over 90% of
millionaires have made their money in real estate.