You want to go into real estate and make a little extra on the side, or maybe even a living. You can do it. You just need to know the basics of the investment property business, so that you can not just stay afloat but enjoy the residual income you’re building. Avoid these three mistakes that too many new investors fall for.
Run the Up Front Numbers First
This sounds obvious, but in a tight economy, it’s not always easy to make the soundest upfront plan. If you are buying a home that will have multi-units to rent, you only need 5 percent down or upfront, and the rest you can borrow.
If the property is over $500,00, you will need 5 percent of the first $500 thousand, and 10 percent of what is left. That is going to turn into a significant down payment that you need to be prepared for.
Don’t Fall in Love
Don’t fall in love with your investment property. Remember that this is an investment property and not a dream home. Consider properties that you may not love all that much. It’s easy to pour your heart into something, but that heart will break if you fall in love with something you are going to rent to someone else or flip.
Keep a Reserve Fund
Whenever you can, put as much away as you can. You’ll need it. Too many investors are just trying to pay the bills today. Pay yourself first and keep it in reserve and running an investment property is going to feel like a cakewalk.
Do Your Research
Before you buy that investment property, make sure you have contingency plans for your contingency plans. Don’t fall in love with the property, just the business. It’s supposed to be fun. It can be if you avoid these three very easy mistakes to make.