The perfect real estate investment is one that has high returns and very low risks. This is only possible if you know how to make smart choices. This means you need to know the three things that make a great real estate investment.
Firstly, you need to find a good return. Real estate is an illiquid asset that requires you to minimize on your liquid assets. Try to make sure that the return rate you get is the same as what it was on your liquid assets. Basically, you must find good cash flow properties, not money pits.
Applying this to real estate investment, what you are looking for is not appreciation, but rather cash flow. The cash flow of a property is the money you have left over from the rental price after you have paid for all the necessary bills in relation to that property. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Additionally, as your rent goes up over time, so will your cash flow. If you have a good mortgage construction, where your payments stay the same, this is even better. You should be looking at a cash flow of at least 20%. There are some great online resources in terms of calculating your cash flow.
Generally speaking, it is easier to get started with rental properties if you are younger, particularly if you don’t have a lot of money to put down. This is because banks usually want at least 20% as a down payment before agreeing on a mortgage. That kind of deposit can be too expensive for many people, particularly if the property itself will need some repairs as well. However, if you are a bit younger, banks may be slightly more understanding. Real estate investing does involve a lot of other things as well. Naturally, one of the most important things you need to do is find a property that suits your needs. If you want to find a property, however, you need to have the time to do a lot of research and you must analyze your options. One of the things you will also have to do is find a realtor that represents you properly. Together, you can start looking for properties. You will then also need to learn about and research what it means to be a good landlord, which takes a significant amount of time as well. Do remember that it is time worth spending.