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Should You Start Investing in Rental Real Estate?


In thinking about the future, you are probably thinking hard about financial security for you and your family. You may have thought about investing in real estate but have not yet made up your mind on whether it will be a worthwhile venture. Of course, there is no straight yes or no answer.

The decision is personal and depends on a variety of personal financial factors and preferences. However, the sumptuous 5.16% national increase in home prices, with a higher percentage increase in high demand cities can be a convincing number to persuade you to acquire a real estate investment. So, should you start investing in real estate?

But first, what is real estate investment means. If you are contemplating about investing in real estate, you probably have considered the variety of ways to do this. If that’s the case, it’s wise to explore more about investing opportunities in real estate.

This is one of the more straightforward investments. It will involve putting down money to secure real estate property and let it go to work for you to give you returns in the future, often in rental income. Over the years, you will have to maintain your property to keep it competitive on the market.

Are you able to personally fund the investment?

The majority of financial advisors recommend real estate investors to invest from their pockets. This means you will have to save up for a down payment for the property and ensure you can cover the mortgage installments and miscellaneous costs without taking out a loan. By being able to cover these costs by cash, you are keeping your credit score safe and your ability to weather low-income seasons from the property.

Is there a positive real estate appreciation?

Before putting your money down for a property, thorough research should be done. You should have an in-depth look at the title deed to get a good picture of the future return potential. Find out whether there are development plans around the area or road construction or who owns the properties around you. This will help you forecast the valuation of the property over the years. Ideally, all the signs should point to a positive income trend in the future based on the location and value of the property.

What is your budget?

Budgeting for real estate investment involves several factors and it also depends on the type of real estate you want to invest in. A common mistake beginner investors make is assuming that their rental income will cover miscellaneous costs and still give them a profit. But because the market may be volatile with highs and lows of occupancy, fixed costs will be constant, and the investor must be able to pay them despite the occupancy level. With that in mind, it’s smarter to set aside a budget for additional costs. If you are starting out, it can also help to invest in a low-maintenance property with minimal operating costs to minimize costs and maximize profits.

The end goal of real estate investment is to put money down on a property and later rent it so that it generates income. Considering the above information will help you make a decision that minimizes risk and yield high financial returns.