Is Real Estate a Good Investment for You?

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Real estate is an excellent investment option that can create a constant stream of income if you handle it well. It can even increase in value over time if you take good care of your property and you can end up making a significant profit.

It’s unwise to go into real estate investing unprepared, however. In fact, most advisers will warn you not to borrow money for investments and have most of the cash on hand to pay for a home or an apartment. At the bare minimum, you need to make sure you can make payments even when the property is unoccupied by tenants. Relying solely on rent can end up costing you money and credit if you have a high renter turnover rate or late payments. Using a loan to purchase a property can add years onto the time it takes to actually make a profit.

The exceptions to this rule are real estate developers working on larger projects. Typically, developers will only have a small percentage of the real estate development funding they need to make their project a reality. When the developer is ready to seek investors, they can make proposals to commercial real estate development companies, individuals, and banks.

Commercial real estate development companies consist of collections of individuals interested in funding projects they believe will be profitable and successful. The only downside with commercial real estate development companies is that the developer has to share some measure of creative control, but many projects wouldn’t be funded otherwise.

Regardless, whenever you invest in real estate, you have to be aware of area taxes and have a clear vision for renting your property. You can go through a rental company to share some of the workload of collecting rent and repairing the property, but this can be expensive. Consider this if you don’t have time to care for a property yourself.

When deciding on a rental price, consider the fees and expenses that rental companies, repairs and utilities incur and incorporate those into the price to keep you covered. You should also put any extra money earned in the first few months and set it aside for unanticipated cost and repairs. Make sure buildings are up to code before you rent them out.

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