Investing in real estate can be highly successful, or it can be a complete failure. Yes, location, location, location is hugely important, but so who you are dealing with is even more important. The sad truth is that you will find that there are some very unscrupulous people who deal in real estate. Consider those late night advertisements on television, where realtors promise to make you a millionaire, for instance.
First of all, you want to get a return on your investment. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. What you should look for is to get the same or similar rate of return. In other words, you want a good cash flow property, and not a property that will only cost you more money.
In terms of real estate, therefore, you should look not for appreciation but rather for cash flow. Calculating your cash flow means you need to work out how much money from your rental is left after you have paid for all the necessary expenses. What you should do is leave your cash flow alone, and keep that as savings as much as possible. As rent prices go up, your cash flow will rise too. If your mortgage payments stay the same, then your cash flow will be even better. You should be looking at a cash flow of at least 20%. There are a number of free to use cash flow calculators available online and you should use these at much as possible.
These are the great properties you should look for if you want to invest in real estate. A perfect investment property is one that requires as little maintenance and management as possible. Unfortunately, this isn’t always as easy as it may seem. To find these properties, you will need to invest quite a bit of time. You must spend the time to analyze and research any options available to you. Most of us who are ready to invest in real estate want to do so immediately. As tempting as it may be to invest in the first thing that comes along, you really shouldn’t do that. Make a wrong decision in the world of real estate, and you stand to loose a great deal of money that you may never be able to recover.