Real Estate Investing Center

Real estate investing. If you need to finance the purchase of an investment property you should know that in most cases the interest rates are going to be much higher than if you were purchasing a primary residence.  Why is this?  Banks and other mortgage lenders generally prefer to lend money for primary residences because they statistically have a much better payback rate than investment properties. 

Do you want to be a landlord? 

Many people procure real estate through the years in order to secure some retirement income.  They figure that by slowly buying up carious houses they can pay off the mortgages with renters and then have a good profit later in life.  This works for many people, but it is vital to realize that being a landlord simply is not a passive occupation.  Every time something goes wrong with the house, the landlord is called.  That means that one day the water heater in your own house may burst and then the very next day the same thing happens at one of your rental properties, and of course you’re liable for both.  You must have plenty of money set aside for repairs to be an effective landlord.  Additionally, a landlord must be a savvy businessperson.  If you are a bit of a pushover and you happen to have some tenants who are not only shiftless but aware of your passive nature then they may wind up trying to take advantage of you.  Can you handle listening to a sob story and still demand rent?  No matter how much you would like the be the Good Guy or the Good Gal you will need to harden your heart a little in order to be a profitable landlord and survive in the real estate investment business. 

How long can you financially stay afloat if your tenants suddenly stop paying their rent or if you can’t find suitable tenants for an extended period of time?  You should never look at rental properties as solid and consistent income sources.  Sometimes there simply aren’t any interested renters and the property will just sit, unoccupied, until the right people come along.  Yes, owning rental properties can bring in money, but only if there are occupants paying the rent. 

Do you want to flip properties? 

Buy a house which nobody else wants because it is slightly wrecked then fix it up and make it a house somebody would actually want to buy.  Before jumping into something like this you need to ask yourself, “Can I fix a house?”  Many times the issues with problem houses extend way beyond cosmetic difficulties. If you go to an auction and purchase a home for $135,000 with the intention of fixing it up and selling it for $175,000 you may be unpleasantly surprised to find that there are at least $30,000 worth of repairs which need to be made, and don’t forget the back taxes which may need to be paid before the title can be officially transferred.  This turns an experience, which was supposed to be profitable into an experience which will wind up costing you more money in the long run.  You need to be sure that you know what you’re getting yourself into.  Just because a home goes into foreclosure and is sold at a price lower than its market value doesn’t mean that it will always be a profitable venture.

Don’t get in over your head. 

You may find that you have the gumption needed to either be a landlord or to fix up houses and sell them for a quick profit.  Just don’t let dollar signs cloud your vision of how much you can handle, both financially and with regards to your lifestyle.  You don’t want to get in over your head with financial obligations, but you surely don’t want to wind up in a position where you are making a good profit but you are exhausted from all the upkeep and administrative duties associated with purchasing investment properties.  Try to maintain a nice balance so that you can still enjoy the process without going broke or wearing yourself out, real investing will take hard work and research but the pay offs can be well worth it.