Though renting out rooms or starting a business are both viable ways to make money, they might not be up your alley. Instead, you may want to focus on investing in real estate properties and earning extra income that way.
However, when you first start out, it is important to know about the potential investment blunders and mistakes that you may run into along the way. By identifying these common mishaps, you can sidestep them and give yourself a better shot when starting out.
Yahoo discusses some of the most common investing mistakes. First is small buys. If you have very little trouble buying up a property, this may also mean that you will have trouble turning a profit on it later. For example, consider starting with a single-occupancy property. If you do this, you will pay less money upfront. However, if you do not have a tenant there, you have a 100 percent vacancy rate. It is also harder to hire property managers if you have fewer properties.
Next is budget buying. Do not just base purchases on down payment or property price. Sometimes, a deal that fits your financial capabilities is still a terrible one. If you see a property with a significant price drop or one that has been around on the market for a while, do some research before taking the plunge.
Finally, be careful with your leverage. Real estate with over 70 percent leverage will often lose deals. Instead, try to keep your debt leverage at around 65 percent, which can help you handle potential financial upsets in the future.