One of the most effective ways to build wealth for the future and attain financial independence is to invest. Rental properties, for one, have the potential to provide solid returns through passive income and tax benefits. They do, however, entail a number of expenses that you must consider, such as property taxes, maintenance, utilities, marketing, vacancy costs, and more.
It is critical that real estate investors break down the costs associated with the property they’re eyeing and plan a realistic budget in line with their financial circumstances and the home’s estimated return on investment (ROI). The key to success is being able to determine the amount you can invest into those properties and to figure out how the spending aligns with your goals and long-term ambitions.
If you are new to real estate investing, wholesaling can be a good starting point. Wholesaling is the process through which the wholesaler contracts a home—usually one that is distressed—with a seller, shops that home around to potential buyers, and then assigns the contract to one of them. It is a less risky method for new investors as it does not require a significant amount of capital to get started.
Lots and raw lands can also be attractive investment options for those with limited funds in that they require comparatively less upfront cash. Whatever your strategy might be, you should always do your due diligence and consider hiring a well-qualified inspector who can pinpoint problems and give you valuable bargaining power.
As you begin tracking your expenditures in a spreadsheet, make sure to allow for some breathing room in case of unexpected overhead and incidentals. To ensure a firm grasp on your borrowing capacity, take into consideration the following factors:
- Your annual income
- Your monthly expenses
- Down payment
- The type of loan and current interest rate
- Loan term
- Estimated repayments
Once you have set yourself a budget, the next step is to review the must-haves and nice-to-haves and to cut out some of the unnecessary expenses. Just be smart about it as what you may deem unnecessary may actually provide great returns.
Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!