Investing in Real Estate – Is It Really a Good Strategy?
Posted by fybmanager20 at October 29th, 2012
Is Real Estate Investing Really Such a Wonderful Idea?
Although investing in real estate can seem like the perfect idea for people that have some extra cash to invest with, it’s not always a good idea. Some people earn decent money when they invest in real estate, while others majorly struggle to make their investments work for them.
Won’t I Earn Money Renting My House to Someone Else?
Investing in real estate usually requires a major amount of cash. Many investors buy houses with the idea of renting them out to people who are looking for houses to rent. Renting a house to a person might not be as profitable as you think. If you buy a house with the intention of renting it out to someone, you’ll be the one paying the property taxes and house insurance on that property. You will want to make sure that the property taxes and house insurance aren’t going to be overpriced for the house you are thinking about purchasing before you make your purchase. You also need to consider whether the house that you’re thinking of purchasing needs any substantial home repairs done. There is nothing worse than buying a house and finding out that it immediately needs a new roof or other expensive repair. A house that needs a lot of repairs can end up eating away at your monthly rental income very quickly.
Don’t Properties Automatically Increase in Value?
If you are planning on purchasing a house in hopes that it will increase in value in the future, make sure you do plenty of research. Some houses actually decrease tremendously in value over a period of just a few years. You need to make sure that you’re purchasing a house in a geographical area where the properties around it are immaculately maintained. By the neighbors maintaining the appearance of their homes, they are helping you keep or increase the value of your house.
Can’t I Just Mortgage the Property When I Don’t Have the Cash?
For those of you thinking that you’ll just mortgage an investment property, keep in mind that it might not be a good idea to sign a mortgage document for an investment. Whether you’re considering purchasing a house to rent to someone or one to have as a general investment property, mortgaging a house can get quite expensive. Think about all the interest that will add up on the mortgage over the years. When you mortgage an investment property and thus pay the interest that accumulates on such a loan, you’re actually paying money each month to keep that property. Unless you happen to rent the investment property to someone who is paying a very large sum of rent to you each month, you’re probably not actually earning money on the property.
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Category: Real estate