5 Things You Need to Know Before You Invest in Real Estate

               Any type of investment is very crucial in everybody’s life as you are giving away your money or even your valuable time. So, it is very important the business venture that you are going to invest in.

               Here are five things that you need to know about the real estate before you invest.

  1. Secure a down payment

               You are going to require at least 20% down payment for buying your first investment property unlike the 3% down payment on the House you’re currently living in. This is because the restriction of mortgage insurance applicable on investment properties. Moreover, investment properties have strict approval requirements and they require greater down payments than your regular buildings. You have to keep in mind expenses needed for the renovation before you pay your down payment.

  • Location:

               The next thing you have to decide is where you want the property to be located, this decision is as important as actually choosing the property itself. You are no longer restricted by where you live when investing in real estate, with the advent of online real estate crowdfunding, you can put money into a property down the road or thousands of miles away.

               While choosing location to increase your chances of good returns, there are a few things you can do. It is advisable to choose for somewhere desirable with high tourism rates, somewhere that has a good track record when it comes to property increasing in value, and somewhere in the middle of a development push.

  • Do your research:

               You need to do proper research before buying your first investment property depending on the clients you’re targeting. You have to make sure that the property is located in an area where there is an attraction of the type of clients you hope to sell or rent to, that will reach to the returns you’re expecting and that will appeal to the market.

               You should use an analytical approach logically based on financial factors rather than considering your personal likes and dislikes, during the proper researching, as this will surely help you in purchasing the best property. Investment isn’t about emotions, it’s about economics


  • Pay your debts:

               You might need to consider the investment tone options as a new investor buying their first investment property, one shouldn’t be carrying debts in their investment portfolio. You must clear all your debts, medical bills or student loans before starting out in real estate.

  • Your first investment property should be a low-cost home:

               It is always a good idea to go for properties that lie in the lower to mid range price brackets even if you are in the financial condition to invest up to a million dollars in your first investment. Some experts suggest the house that doesn’t cost you more than $150,000. You have to keep in mind that you will need to spend more money on the renovation of the house before renting or selling it.

               Moreover, since it is your first investment, you will be in the safe zone if you invest as low as possible. You want risk losing too much even if you don’t hit the expected profits.

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