If you’re like most people in the USA, you don’t have the income you’d like- but you want to expand it. A fairly lucrative way to make a passive income, where you don’t have to do much work to make money, is to get into real estate. By renting out, you can make money just by owning a property. In flipping, you’re just saving the future homeowner the work of fixing up the place. It’s rewarding to work with a high return, but it’s not as easy to get into it as you’d hope.
Here are five steps to lead you toward living your real estate dreams!
Know What You Can Afford
Don’t be overly generous when trying to figure out your budget. How much do you make a month, and on average, how much do you spend of that income? If you’re hoping to rent out a property that you will own, you won’t need to save as much- but if you’re flipping a house, you’ll need to have a lot of collateral.
Find What’s Working In Your Area
What are the property costs in your area? How quickly are homes selling? If you’re not sure whether to flip or rent out, it’s better to take it slowly. The smarter choice would be to rent out a property and put the extra income right into savings to go towards your next property. This option won’t get you money as quickly, but it can make sure you have an income of savings to work with, while also getting real estate experience.
Look Into Rent Rates Vs. Mortgage Rates
Consider how much of an income can get generated from renting out a property you’ve purchased. In some areas, like Houston, the mortgage rates average higher than rental prices. This city wouldn’t be a smart area to start renting.
Meanwhile, in cities like Orlando, the mortgage payments are lower, and you’ll be making an income the moment your down payment gets paid off.
Consider Starting Small
Instead of buying an estate right off the bat, go for a smaller purchase like a condo. You can work in this smaller space to make sure that you’ll be able to renovate and update cheaply and rent out or flip for a profit. A smaller space that costs less money is a better jumping-off point.
Keep A Budget and Bottom Line
Don’t lose sight of your budget. It’s easy to get distracted by thinking certain upgrades are going to make you a lot of money, but there’s never a total guarantee on that. Use a mortgage estimator and figure out how much money you have to work with every single month. If you sell a property for a large profit, don’t spend all of it at once on a new car or work van. Go house by house and build up your budget as you build up your savings. The worst thing you could do is lose a home that you’ve worked on for months. Be mindful, and take your time.
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