Rather than start a business or rent out a room in your home, you want to make extra income by investing in real estate properties. As a beginner, you deserve to learn about real estate financing and investment blunders rather than make your own mistakes.
Yahoo! explains several real estate investing mishaps. Learn how to give yourself and your investments a solid chance at success.
Budget buying
Rather than base investment decisions on property price or your down payment, look deeper. Investments that fit your financial capabilities could still be terrible deals. Do some digging before scooping up a property that spent a lot of time on the market or received a significant price drop.
Small buys
Properties you have little trouble buying could become properties you have trouble making money from. For instance, you may want to start with a single-occupancy property. That makes sense from a beginner’s perspective, but consider that when that property sits empty, you have a 100% vacancy rate. If you want to hire someone to manage properties for you, you could have trouble paying the person or company if you only rent one or a few units.
Too much leverage
Be careful about how much leverage you put on an investment property. You may lose a deal if you encumber real estate with over 70% leverage. Instead, aim to keep your debt leverage percentage at roughly 65%. This percentage could help you weather financial storms.
Learn from others’ slip-ups instead of your own. Rather than invest harder in the investment real estate market, invest smarter.
