April 30, 2019
All real estate investors are looking for options that have high returns and as low a risk as possible. This is only possible if you know how to make smart choices. To give you a foot in the door, consider the following three things that make a great real estate investment.
You may want to compare rental real estate to the stock market. This is because most of us understand these and know that we need to spend money to make money. However, the problem with stocks is that they are so risky. It is comparable to retirement calculators, who make a guess in terms of when we die. As a result, we may end up broke if we live slightly longer than expected.
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. Plus, your cash flow can increase as rent prices go up over time. 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 some great online resources in terms of calculating your cash flow.
You may want to consider investing through a REIT (real estate investment rrust). Although this means you don’t need as much money to get started, it also means the returns are smaller. Working with REITs basically means you invest in other corporations. Through a REIT, you can invest in anything ranging from an industrial park to a shopping mall. You can find the value of a REIT on the stock exchange and NASDAQ. Basically, when you invest in a REIT, you are working with a type of mutual fund that looks solely at real estate. There are a few things to think about, however. Look into the economic conditions of the locations of the key holdings first. Find out how the REIT has performed in the past. You should also consider their future plans. Find out who the manager is and what they history is. Finally, what is the state of the current real estate market and how will the REIT respond to any changes in this market?