The perfect real estate investment is one that has high returns and very low risks. To achieve this, you need to be able to make smart decisions. To give you a foot in the door, consider the following three things that make a great real estate investment.
You should look at rental properties like stock markets. This is because most of us understand these and know that we need to spend money to make money. However, with stocks, all we can do is hope that they increase in value. This is also the case with retirement calculators, who literally have to guess when we die. The problem is that if there is a mistake in this estimation and you actually live longer, your final years will be spent in poverty.
In terms of real estate, therefore, you should look not for appreciation but rather for cash flow. Calculating your cash flow means you need to work out how much money from your rental is left after you have paid for all the necessary expenses. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Additionally, as your rent goes up over time, so will your cash flow. Best of all, your mortgage payments should stay the same. You should make sure that at least 20% of the money you get is cash flow. Make sure you take advantage of the online availability of cash flow calculators.
You can also decide to look into a real estate investment trust (REIT). Although this means you don’t need as much money to get started, it also means the returns are smaller. REITs are popular because you are essentially investing in real estate corporations. This can be anything from a construction company to a theme park. You can keep track with the performance of a REIT through the NASDAQ and stock exchange. A REIT can be best compared to a mutual fund, although the REIT invests solely in real estate. You do need to think about a few things before you invest in a REIT. The economic conditions of the key holdings is one. Also look into the performance history of the REIT. Also look into their future plans. Find out who the manager is and what they history is. Lastly, you need to look into the current state of the real estate market and how the REIT is expected to respond to that.