We’ve come to believe that investing in property is the best option available. And we’ve also been told that you don’t have to start huge – small, albeit significant investments can help you create a credible investment portfolio. But nobody told how to get started! If you’ve always wanted to invest in property but didn’t know how to start, read further:
Even before you begin investment, make sure you check your financial health. List your assets, including salary, fixed assets, etc. and deduct assets to get a reasonable idea about how much cash you can afford to invest. You can also apply for a bank loan as long as you can prove that you have a steady income and a well paying job.
Buying a repossessed house is probably the best bargain for beginners. But remember, the real estate investor business is competitive. You’d be competing with people ready to pay in cash. Not just repossessed homes, but look for properties where the owner is planning a short sale, or houses where they cannot be bothered to deal with estate agents. Typically owners of such homes are willing to settle for less as long as you can offer them other sops like – buying as it is (the junk and all), hassle free buying, etc.
Keep your preapproval and prequalified letter ready
A prequalified letter is a statement by the bank that mentions the amount that you are approximately eligible for when applying a loan. But a preapproval letter is a stronger commitment from the bank stating the near exact amount that you are eligible for and the rate of interest for the same. Keep this letter handy should you need to convince the lender about choosing you over others.
This is as old as the practice of land ownership. You buy a property and rent it out. The income from the rent helps you pay the mortgage, taxes, and other overhead costs. Over time, the property appreciates in value. You’ve paid for the mortgage and the rent is now your profit. This isn’t as simple anymore thanks to the fluctuating market conditions and the increased cost of maintenance. As a landlord, you can be taken to court for substandard maintenance. Of course, you can always outsource the work to a property manager who does the job for you.
Not many have heard about this, but real estate trading is somewhat similar to stock trading. Real estate investors buy and hold the property for some time and later sell them for a profit. This is also called flipping and is very popular trade in the market.
