Real estate Investing can be lucrative when done in a proper manner. Mind well if it is not done properly then it can be damaging in terms of money and time. The reason for failure when people are investing in real estate is having no idea about the magnitude of the project. Also the mismanagement in executing the deal before it really starts providing money is the cause of being unsuccessful in a real estate business.
Before you start to invest, its time to answer a few questions. Here they are
First – What credit rating do you have?
In order to have a loan from the bank, the number one point to keep in mind is to maintain good credit rating over an interval of time. This will give measure of their readiness to take a risk with new ventures of yours.
Second – What is the balance in your bank?
The extent to which the ability to purchase the new venture very much depends on whether you are purchasing the real estate property to live in or to rent it and in that the answer to the above question has a big role to play. Thumb rule says you should have sufficient balance in bank to pay 6 months of mortgage payment in addition to the payment of down payment.
Third – What exit strategy would you opt?
In real estate investing two approaches are followed – buy and keep the property for the time it appreciates to make money or buy renovate and sell quickly to make money. Both the types of approach are viable options to make money. But require different ways to possess the property and exit strategy. You have to be clear about the type of approach to be followed when you have decided to invest.
Fourth – What is you knowledge about the market?
You should be thorough in your knowledge about local markets before you take a plunge into estate market. You should be able to anticipate the direction in which local market are intended to move that will be helpful for you to make successful investments.
Fifth – How much time or energy is to be devoted to management?
The success of investment in real estate investing depends on effective management. You have to be sure that rents are collected, maintenance of property is done on regular basis and cash flow is very stable.
Finally, Free REIT Trainer is an excellent web resource that I use often. If you go their right now, you can access a free video he calls “The 12 Month Real Estate Millionaire” that clearly lays out the tactics and techniques that he uses to earn big money while hanging out in Starbucks!