You might want to consider investing in rental properties. However, you can’t get started in real estate investing before you learn a little bit more about it. Rental properties in particular are still overlooked by many investors, even though they can bring in an excellent return.
The first thing is to find something with a good return on investment. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. You need to strive to get a return rate that is the same as what it was on your liquid assets. This means that you should find a true cash flow property, and not a money pit.
In terms of real estate, therefore, you should look not for appreciation but rather for cash flow. Cash flow is what actually comes into your bank account from your rental properties after you have met your financial obligations. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Additionally, as your rent goes up over time, so will your cash flow. This is particularly true if your mortgage payments stay the same. The best cash flow is at least 20% of your overall income from the property. There are a number of free to use cash flow calculators available online and you should use these at much as possible.
For those who don’t have a lot of money to put down on a property, it will generally be a lot easier to still get started in it if they are younger. If a bank is to provide you a mortgage for a rental property, they will usually want you to put at least 20% down. This can be a significant amount, particularly if the property needs repairs as well. However, banks tend to be a bit nicer to younger people. Real estate investing does involve a lot of other things as well. Of course, one place to start is actually finding a property. If you want to find a property, however, you need to have the time to do a lot of research and you must analyze your options. You also need to spend some time looking for a realtor that can represent your interest. Thanks to their help, you should be able to find properties of interest. You will then also need to learn about and research what it means to be a good landlord, which takes a significant amount of time as well. However, do always remember that it is absolutely worth spending this time.