Real estate investment: Knowing when you’re ready to invest

Real estate investment is not that simple. Even if you are doing well at investing and making things work for yourself, you need to give things a background check to make sure that your property is making you rich. There are many things that people ignore when it comes to investing. These things are cost, taxes or upkeep. This makes things intricate and that’s the reason why everyone is not successful as a real estate investor. But if you fulfill the below listed requirements, you can start investing in real estate right away.

• Your finances must be in order:

In order to keep an eye on your finances, you need to know the 50/30/20 rule. According to this rule, 50% of your salary goes to needs, 30% goes to wants and 20% to savings. You will need more saving as down payments are to be paid in order to buy a property. Similarly, you need to keep a good credit score to be an investor. The higher your credit score is, the better the terms you can get for loans.

• Are you ready to learn for the art of real estate investment?

Being a landlord is not simple. You need to keep in check with the city or state laws, maintenance and other grievances. For example, in Chicago, owners need to be careful about the security deposits made by tenants. Similarly, there are so many other things to learn about the real estate market. This can only be done through knowledge acquisition.

• Market research

Before you consider yourself able enough to invest in real estate you must know the ins and outs of your market place. You need to know about the ongoing rate i.e. vacancy rate and going rates. You also need to know what type of people that are living in a certain area, so that you can place yourself better according to the market. You must also be careful about the rent frauds and other issues that cause liability.
Rent fraud in the form of an exaggerated claim for the going rate is common, he says. Don’t rely on what sellers say is the current rent; get offset statements from renters instead. These signed certifications verify the amount of rent tenants pay, when it was last raised, the amount of the security deposit and the name of the person living in the rented unit. Then compare that information with the rent and other details stated on the lease.

• Handling the pressure

An empty property is a grievous site for an investor. An empty property is losing money and you cannot stay motivated in such a situation. You need to have a big heart and bear such problems if they occur. Similarly, managing tenants is also tough. Make sure you run background checks on them and look at their records related to crime. Even if your tenants are nice, you still need to work on continuous maintenance.