Real estate investing comes with many benefits that you may be eager to start taking advantage of. For example, the right rental property can provide you with monthly cash flow coupled with equity appreciation, tax deductions and more, and these can have incredible effects on your overall financial situation. As a first time real estate investor, you may be excited to start searching for a property to invest in, but you may consider following a few helpful tips to make your search more successful.
Determine Your Budget
There are investment properties that range in price considerably, and you will need to know up-front what your budget is before you can begin your search.
The right real estate investment will generate revenue to pay your monthly mortgage payment and expenses, but there may be months when your property is vacant. Therefore, in addition to thinking about the amount of down payment that you can afford, also think about how affordable it will be to manage property expenses when the space is vacant.
Consider Different Communities
You may consider being flexible regarding the communities that you invest in. Each community may have a different economic base and primary demographic. For example, some towns or even suburban communities may be largely comprised of college students or military professionals. Think about the benefits between the ease of finding new tenants versus the benefit of having long-term tenants.
Analyze Cash Flow
After you have found a few properties to consider, it is important to analyze cash flow. Each property will be unique with regards to the required mortgage payment, income generated, property taxes and even repair and maintenance needs. While you can estimate these expenses initially, you should request historical operating statements from the sellers early in the process. You will find that some properties can be considerably more profitable than others, so it is important to complete a thorough analysis.
When you are preparing to make your investment, consider following these tips, and seek the advice of a helpful mortgage advisor who can guide you in the right direction.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.