Real estate investing can be a sure way to wealth as long as you make sure that you are not getting overextended. Real estate returns on investment have remained higher than stock market returns year after year despite the recession. Another great thing about real estate investments is that even if you are upside down on an investment that investment can still pay you steady monthly income. Real estate is virtually the only investment in which other people pay off your principle.
As good as all of this sounds you still must realize that there is risk involved in any investment scheme and anyone who tells you differently is attempting to pull the wool over your eyes. What you can do to make sure that you are taking as calculated a risk as possible is do your research and run all of your numbers.
This is a business where details matter. If you are not the type that puts much stock into analyzing details you may want to find another avenue to wealth. I believe in keeping things simple and in this case that means, make your money when you buy. This essentially means do your math and make sure that barring any wild market fluctuations you could easily get rid of your property at a profit.
The first step is to find a good property and make sure that it is financially feasible. If you had zero income off of this property would you be able to stay afloat for at least six months? Too many people have jumped into real estate investment without adequate reserves and been served a harsh dose of reality.
Next, make sure that your monthly income will provide an acceptable amount of cash flow. Your magic number is entirely up to you but it should be positive. Never, let me repeat myself, never, settle for negative cash flow. There are too many good deals out there even in sellers markets to settle for negative cash flow.
Keep these simple tips in mind when analyzing real estate investments and be prepared to walk away from a deal that isn’t as good as it originally seemed.