If you want to build real wealth over the course of your life, you’re going to need to do a lot more than just cull some savings from your paycheck. True wealth requires investment, as any financial advisor could tell you, and there’s no time to start an investment like the present.
Investing in real estate is as sound of an idea as it ever was, and if you want to build wealth through the property there is a lot to learn. Purchasing your first rental investment property can be a big leap and it’s important to get all your facts straight before diving right in.
What steps do you need to make your initial property investment a success? Read on and we’ll walk you through what you should be familiar with.
Do Tons of Research
A lot of the work that will surround purchasing your first rental property will take place before you put any money down at all. You need to take the time to understand how real estate works within your state and town.
There are many laws that you’ll need to be familiar with as a landlord. Breaking any of these laws could jeopardize your odds of reaping the profits from your investment over time. There are many housing laws that function differently from state to state, so there is a lot to get familiar with.
In addition to learning about the laws, you’ll want to get familiar with what the housing market in your area generally looks like. Look into properties that resemble yours and are within the local area.
This will give you a sense of how much you’ll be able to charge, which you can offset against the costs. There is a housing shortage, so you can get a better sense of how you can benefit from the current market when doing this research.
Get Familiar With Finances
With this research underway, you’ll be able to take the next step in home investing: actually purchasing a property. Once you’ve found a property that you like, you’ll want to do all the associated financial math before signing anywhere on the bottom line.
The main cost you’ll want to familiarize yourself with is what the monthly mortgage fee will be. That will be your main fixed cost. On top of this, you’ll want to know about your insurance costs, property taxes, and a general sense of how much maintenance might cost monthly.
Add these all up and you’ll see what your base cost is per month. This can help you to determine what your rental cost should be, as it should be a fair bit higher than these costs so that you can make a profit.
You’ll want to stay competitive with the costs of other properties in the area, but not go so high that the profit you make isn’t worth the effort put in.
If you can find a property that meets this balance, you’ll be well on the way to overall success.
Running a Rental Investment Property
If you’re looking to increase your overall wealth in the near future, you might want to pick up a rental investment property. The above information can help you determine how best to get started.
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