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7 tips to keep in mind when buying your first property

Many people got rich buying and selling real estate. So investing in real estate is a lucrative business. Unlike buying stocks, you can easily invest millions of dollars in your first purchase. But you must have the necessary information before starting. Here are some tips to get started.

1. Repairs

Do you know how to use a toolbox? Can you repair drywall? Can you unclog a toilet? There is no doubt that you can call in a professional to do these jobs, but this will cost you a significant amount of money. Most homeowners, especially those with few houses, do the repair work on their own to save money. So if you can’t do these projects yourself, you may not want to be a homeowner.

2. Debt

Experienced investors have debt as an important part of their investment portfolio. However, a common man cannot afford to be in debt. So if you have a student loan to pay or some medical bills to pay, buying a rental property will not be the right decision for you.

3. The advance

Typically, if you want to invest in real estate, you need to be ready to make a big down payment. Apart from this, investment properties require more stringent approval requirements. Therefore, the small sum that you deposit in your home will not work for your investment property. To do this, you need a minimum of 20%. So, you have to keep this in mind.

4. Higher interest rates

Now, the cost of obtaining a loan may not be that expensive, but the interest rate on your investment property may be a bit higher. Keep in mind that you must make a mortgage payment that will not be that high. This payment should not be too difficult for you.

5. Calculate your margins

Large companies that buy some distressed properties choose to get at least a 5% return on their investment. The reason is that they have staff to pay salaries to. As an individual, we suggest you aim for a 10% ROI. According to estimates, the cost of maintaining the properties is 1% of the property’s value.

6. Buy an upper fixative

You may want to get a house that can be bought at a bargain price to rent. However, if you are buying for the first time, doing so will be a bad idea. Also, unless you are good at home improvement, the renovation will cost you a lot of money. What you have to do is look for a home whose value is below the market value. Also, make sure the house doesn’t need major repairs.

7. Calculate operating expenses

On average, operating expenses on a new property are at least 35% of the gross operating income earned from that property. Therefore, you must also calculate your operating expenses.

Hopefully, you are now ready to buy your first home.

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