The term Investment property can be intimidating to some, but can often be a very viable and fruitful purchase.
The goal of real estate investing, is ultimately to make a solid return on investment. Essentially, you'd like your property to at the very least cover its own costs, which could include real estate fees, closing fees, mortgage payment and property tax, insurance, utilities and maintenance costs. The idea clearly, is for the property to not only bear these costs, but to one day generate revenue.
Your property may increase in value over time. which can happen gradually or rather quickly sometimes. It is suggested to apply some due diligence and conduct some research in regards to market trends and similar areas.
Cash flow income is accumulated directly from renting out an investment property. This can derive from an apartment building, office or storage space or any property that generates income.
It is important to remain realistic when purchasing your first investment property. You may be acquiring a fixer-upper and decisions on proper cash to project allotment are crucial. Your first revenue property doesn't have to be your dream property. It's better to start small and gradually work your way up than to go overboard and bury yourself in debt or defaulting on a loan.
Clearing any existing debt prior to acquiring a rental property is advisable. Carrying over debt could make it more difficult to get approved for a favorable mortgage and you may become overwhelmed when expenses associated with the property begin piling up. Interest rates on an investment property will be higher than a principal residence property so it is essential to budget accordingly.
Home improvements are often more costly and time-consuming than initially expected. For the more seasoned real estate investors, and who have established relationships with contractors who provide reliable and cost-effective work, the fixer-upper can really pay off. For the first-timer, most would suggest siding with a less challenging project and gaining valuable experience before diving into the more complex fixer-upper situations.