Investing in real estate is one of the most secure ways in which to build your wealth. Making the right real estate investments can help you develop a passive stream of income while building your list of financial assets.
Furthermore, real estate investments can exponentially increase your revenue over time. This can help you retire early, become exceedingly wealthy, and all without putting in 40 or more hours of work each week.
But before you get started, there are a few things you should know about investing in real estate. Keep reading for all the details.
The Costs of Your Investment
First, let's talk about the costs of your real estate investment. When you buy a commercial or residential building, it's not just the loan payment you'll be responsible for. There are other costs associated with owning property, such as:
- Property taxes (in most states)
- Utilities (water, electricity, gas, waste removal)
- HOA fees (if you invest in a residential property inside a homeowners association)
- Common area maintenance fees (for some commercial properties)
- Realtor fees
- Closing costs
- Income taxes (based on tenant payments)
- And more
Before buying a house or commercial property, make sure you account for all of these expenses. Failing to do so could lead to financial stress in the future.
Your Commercial Loan Eligibility
Once you assess your budget, you can start looking into commercial real estate loans. Remember, what you can afford and what your lender believes you can afford might be vastly different.
Your loan eligibility for investing in real estate depends on your credit score, credit history, debt-to-income ratio, and more. If you fail to get approved for the loan you want, you might need to take a step back and assess your situation.
You can opt for a different, less expensive commercial property and start smaller than you originally planned. Alternatively, you can learn how to boost your credit score. Lastly, consider taking on a business partner or co-signer for the loan.
The Type of Building You Want to Invest In
When investing in real estate, you have several options. Many people choose to invest in residential units to keep things simple. You can start by buying a house and renting it out to tenants to generate cash flow.
If you like the idea of investing in commercial real estate, your options expand substantially. There are industrial buildings, recreational facilities, office spaces, retail stores, medical facilities, and more.
Your Duties and Responsibilities as a Landlord
The type of building you invest in will directly affect your property management duties and responsibilities. As a landlord, you are required to provide a safe and suitable environment for your tenants. This often means making repairs and renovations when necessary.
Furthermore, it will be up to you to market your available units, screen tenants, collect rent, and deal with any issues. If investing in real estate is something you want to do, but you prefer to let someone else handle real estate management, talk to a property management company.
Thinking About Investing in Real Estate?
Clearly, there's a lot to think about before investing in real estate. Follow the advice written in this article to make an educated decision before you get started. And remember, it's okay to ask for help.
If you're ready to buy real estate but want help with property management, we're here for you. Contact us today to learn more about how our company can help your properties thrive.