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June 22, 2018

5 Tips for Investing in Real Estate

Investing in real estate can be the ideal way to make a good income and a great return on the money you put into your venture. There’s a lot to think about though and it’s not something that you can enter into lightly. If you rush, you can easily make a big mistake, so taking your time and carrying out research is essential. These five tips for investing in real estate will help you get started.

Think About Location

The location of your investment property is hugely important. If you choose the right location, you’ll be able to make a lot more money back than if you choose somewhere no one wants to live. You can work out where the good locations are by searching for properties in that area. For example, looking for Newport Beach homes for sale will show you just how many people want to live there, and what kind of houses you can get for the money you have to invest.

Find The Bargains

One of the keys to successful real estate investment is to find properties that are selling for a lot less than other homes in the area. Of course, this could be because there is a major issue with them such as needing a new roof or subsidence, but a home report will tell you this. The low price could just be because the sale needs to happen quickly, or because it needs some renovations. If this is the case, you can easily make money by buying at the right time. Search around before committing.

Know Your Tax Benefits

When you want to invest in property, it’s a good idea to look into the tax benefits that come with it as well. Otherwise, you could be missing out significantly. Whether you are buying the property to rent out as a retirement investment or because you want to use it as a stepping stone for many more properties, you can get a good tax reduction when it comes to depreciation, for example. The best thing to do is to consult a taxation specialist as it’s important you receive all the benefits you’re entitled to.

Look At Your Credit Report

When you buy real estate, you’re probably going to need to borrow money to do it. If that is the case, your credit report should be checked over to ensure that you will be able to borrow what you need. This is the ideal time to make sure there are no mistakes on your report and, if your credit is lower than expected, you’ll need to work to make it better before investing because even if you can buy a property with no mortgage, you may need to borrow to fix it up, and if your credit is bad you won’t be able to, and then you’ll be stuck with a property you can do nothing with (apart from possibly sell at a loss).

Think Of The 1% Rule

The 1% rule will give you a good idea as to whether the property you are thinking of investing in is a good one to buy or not. The rule states that the income from the property needs to make at least 1% of the price of the property each month. So, a property you buy for $200,000 should bring you $2,000 minimum each month. 

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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