What do I Need to Start Investing in Real Estate?


Are you thinking about buying a property for investment? Many of the wealthiest and most powerful people have come from real estate, so there are many grounds to believe it is a worthwhile option. However, as with any investment, it is best to do your homework before investing significant amounts of cash. Here, we look at some of the things to think about.

Little to No Personal Debt

Debt may be part of a clued-up investor’s portfolio investment strategy, but the ordinary citizen should resist it. If you have college debt, unpaid medical bills or dependents who will be going to college soon, buying a rental property may not be the best option for you at the moment. 

Being careful is vital. Of course, if the yield from your investment is definitely going to be more than the total cost of your debt, it might not be such a big deal. However, it is crucial that you leave yourself with a wide safety net. If you end up struggling to pay off your debts, you are going to end up in a financial muddle very quickly, and suddenly, that investment is not going to seem like a good idea after all. 

Readiness to Be a Landlord

You have two options when it comes to being a landlord. You can be hands on, managing it yourself, carrying out any necessary repairs, and staying on top of things. You can also look at rental property management. There are pros and cons to both of these. Doing it yourself can save you money, but it can also be a lot of hassle that you might not want. 

A Down Payment

Investment properties typically necessitate a larger down payment than owner-occupied properties and have more rigorous acceptance criteria. You will likely need at least a 20% down payment, if not more, as insurance for mortgages is not generally available on properties bought for renting. 

The Right Location

The last thing you want is to be tied to a rental property in a deteriorating area rather than one that is secure or continuing to grow. A city or area with a population increase and a redevelopment plan in the works offers a great investment opportunity. When looking for a financially viable rental property, look for one in a location with low property taxes, a good school system, and plenty of facilities like parks, shopping centers, and restaurants.  Furthermore, a low-crime neighborhood with public transportation and a widening job market may have a larger pool of potential tenants.

Landlord Insurance

Protect your new investment by purchasing landlord insurance as well as homeowners insurance. This type of insurance typically protects against damage to property, lost rental income, and liability should someone be injured because of inadequate maintenance.

Knowledge of Your Legal Responsibilities

Landlords and tenants must be familiar with the laws in their state and region.  To avoid legal problems, it’s critical to understand your tenants’ rights and responsibilities in terms of security deposits, lease requirements, eviction guidelines, fair housing, and other issues.