The additional income stream that real estate investments can bring in can help you build wealth. But it’s not always easy to get started, especially in this ultra-competitive real estate market.
“You have to love houses,” Redfin CEO Glenn Kelman tweeted during a recent Grow Twitter chat. “Most of the folks I know who’ve made a lot of money from housing love the thrill of the hunt, have an eye for design, and know enough about home-improvement to do the work themselves or manage the people who do.”
Consider The Maintenance Costs In Time And Money
As Kelman pointed out, home improvement know-how is a valuable skill when it comes to investment properties. The maintenance can be both time consuming and costly. If you don’t feel you have the time, you’d likely need to hire a property manager, says certified financial planner Jeffrey Levine, the chief planning officer at Buckingham Wealth Partners.
“Most people who’ve owned a home know how much time it takes to maintain it,” he wrote. “The same applies to rentals!”
Choosing the right tenant is another way to help keep maintenance costs down, says Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth. “You don’t just want any tenant,” she wrote. “You want a tenant who pays their rent on time and treats your property with respect.”
Understand The Math
“If you want to be an investor you need to understand the math,” tweeted mortgage originator Jennifer Beeston.
There are a number of questions you need to ask yourself before going all in on an investment property, she explains. “How much are the utilities going to cost? The property that you are buying, does it have deferred maintenance?