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Why You Should Be Considering Real Estate Investment
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. Luckily, if you know the three things that indicate a great real estate investment, you are a step closer to achieving that.
First, you need something with a good return. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. You need to strive to get a return rate that is the same as what it was on your liquid assets. In other words, you are looking for a property with potential cash flow, rather than a money pit.
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. If you can, try to leave your cash flow alone in a bank account to create significant savings. As rent prices go up, your cash flow will rise too. This is particularly true if your mortgage payments stay the same. 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.
In order to make a good real estate investment, these are the things you should be looking for. The ideal property is one that doesn’t require too much maintenance or management. Unfortunately, this isn’t always as easy as it may seem. You need to be able to invest a lot of time in order to find these properties. You will need to look into all your available options and research and analyze them properly. Most of us who are ready to invest in real estate want to do so immediately. You should never invest in something that isn’t as secure as it can be, even if you have been waiting for a long time. The reality is that if you invest in a terrible property, then you will struggle to every see a return on investment and you are more likely to actually lose money.
