Investing in Real Estate For Beginners in 2021
Investing in real estate, you hear it more and more often. Successful stories from people who put their money into real estate and thus very quickly build a ‘passive income’. But what exactly is that? Is real estate investment really a good way to earn extra money, and if so, how does it work?
Everyone dreams of it sometimes; be financially independent. What could be a nicer feeling than waking up every morning with the idea that you no longer have that pressure to ‘have to work’. By investing in real estate, you can quickly provide for your daily maintenance and fixed costs with a few investment properties.
Walking around with the idea that you no longer have to work for your regular expenses but only for your choice without any burden. When you invest in the right way and outsource property management, you have nothing to worry about your investment properties. You will receive the rental income neatly every month into your account. In addition to rental income, you are also assured of a significant increase in the value of the home in the long term, and you also have a substantial pension pot leftover when sold.
What is real estate investment?
Real estate investment actually means buying a real estate object yourself.
Return is an important term when it comes to investing. Return is basically the ratio between yield and investment. The higher the percentage return, the more profit the investment will yield.
Many investors are talking about creating passive income. This is income that does not come from salaried employment or other activities to be carried out yourself. By investing in real estate, you create such an additional income, namely the rental income that you receive every month from the property without any work having to be done for this.
How do you invest in real estate?
It all sounds nice and well, investing money to make more money. But is it easier said than done? Can you only start investing in real estate when you already have a lot of money yourself?
Well, that’s not too bad, most people think. An average terraced house is easily around $200,000, but that does not mean you need to have $200,000 in your savings account to be able to invest.
There are several banks and lenders that offer an investment mortgage. You can therefore invest by means of a mortgage. Of course, you can also pay off the purchase price in one go if you have the money.
How to successfully invest in real estate?
Investment mortgages make real estate investment more accessible to the average person than people think. Instead of saving for the car you have longed for years that costs $40,000 and will undoubtedly decrease in value, you can already make a good investment with the same amount, which will only generate more money. This way, you can later drive the car you want and keep some extra pocket money in your savings account.
But how to invest in real estate with as few risks as possible? Below are essential tips that you will want to follow when investing in real estate.
- It is important to research where you are going to invest and in what you are going to invest. Check the state of the property in advance, whether the property is in a good location, in a good neighborhood and whether there are facilities nearby such as supermarkets and schools. Make sure that there is a lot of demand in that area and that you quickly find a tenant or a buyer. When investing in real estate, it must be considered whether the home will also be rented out throughout the year in bad economic times. If this will be the case, the property is suitable to add to your real estate portfolio.
- It is useful to make a plan. Take a look at the building that you have in mind and think for yourself what costs you will receive. Think of property tax, sewerage charges, water board tax, insurance, maintenance, etc. Also, take into account unforeseen costs.
What may need to be replaced immediately before you start renting out, and make you create added value by adding an extra room or by renovating? Think of these things before you choose a property to invest.
- You want to look for a bank that provides you with an investment mortgage. It happens that a bank rejects your request. Therefore, visit various banks so that you can guarantee the financing of the property.
Different banks also offer different mortgages. One finances 70%, while the other finances up to 80%.
- It is important to ensure that there is always a tenant. In case of vacancy, you pay the rental costs yourself. So, network in advance and look for potential tenants.
Make sure the tenants are reliable. Focus on the right target group, set requirements for the tenant, and meet interested tenants face-to-face.
- Finally, if everything went well, you can enjoy your extra rental income. You have built up an additional income source. Now the question is, are you already satisfied with the income from one property, or are you going to expand the extra income?
The leverage makes it possible to make an investment with the rental income or added value of the property. This way, you can expand the passive income as much as you want, as long as you have time for it. These steps can, therefore, always be repeated. For guidance, contact the best real estate agent who could help you with the best advice on property investment and management.
