7 Simple tips for first time real estate investors
If you consider investing in real estate as an investment tool towards building wealth in the long term you would realize that it is a complex process. It is a whole lot more than having your tenants to help you pay your mortgage. There are of course many pros and cons involved. Instead of going into the many complexities, the following are some simple tips that would help you in the process.
- Visit your bank or a mortgage broker to determine the amount of money you could afford to borrow for the investment involved.
- You need to find out the properties which have a substantial amount of positive cash flows, so much so that it should be able to pay off the mortgage payments along with all the related costs involved. These could be property taxes, utility bills, and insurance bills and so on.
- Find out a reliable property broker who can guide you through the entire process and is sufficiently experienced at the job.
- Get the proposed property you intend to buy inspected by a professional inspector who can tell you about the exact amount which would be required for repairs and so on.
- You need to keep a proper record of all the transactions which need to be made. This is both in terms of the income you would make from the property and also the total expenditure to acquire the same.
- Be careful not to sell the property you buy quickly. Revenue agencies might view this activity and income involved as business income. This means that you might have to pay a heavy amount of tax on the profit of your investment. It is best that buy properties over the long run, and then rent them to right tenants at the right rates. This will be help you to reduce the outstanding mortgage amount outstanding and also help to create an asset over the long run.
- Be on your guard because this strategy may not work always. So be prepared if the plan should fail. You must have a backup Plan.
