You need to know a lot of things before buying your first investment property.
Buying a home first also means missing out on potential tax benefits with keeping an investment property. If you buy an investment property first, the first benefit is that it can be treated purely as a commercial asset. I.e. You don't need to be emotionally attached, it doesn't need to be in your favourite suburb.
Buying REITs
REITs are undoubtedly the easiest form of real estate investing, making them an attractive option for beginner investors. REIT stands for "real estate investment trust".
It states that when evaluating properties, investors should calculate monthly rent to be at least 1% of the total purchase price. The idea being that if you can meet the 1% rule, you should be able to meet your monthly expenses and generate a positive cash flow on the property.
Renting out your property may not always require you to notify your mortgage company. It completely depends on the rules established in your mortgage contract. Be that as it may, it is generally a good idea to contact your lender, regardless of whether or not it is required.
Your New Rental Property Will Appreciate in 2020 and Beyond
While price growth has slowed down some in different real estate markets, investment properties will still continue to increase in value. Zillow puts the average real estate appreciation rate of property in the US housing market 2020 at 2.8%.
Real estate has a lot of operational costs
You also need to budget for constant maintenance costs. Another rule of thumb is to budget for at least 1% of the value of the property in annual maintenance costs. If you own a property you also need to pay for insurance, which can run about $1,500 per year. Vacancy costs.
There are four big reasons for this: it likely won't generate the income you expect, it's hard to generate a compelling return, a lack of diversification is likely to hurt you in the long run and real estate is illiquid, so you can't necessarily sell it when you want.
One drawback to investing in a rental property is that for most people, owning a rental property is a serious concentration of their assets. ... Like it or not, by owning a rental property, you're tying yourself to the local real estate market in a very tight way. Concentration of assets is not a wise investment strategy.
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