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.
If you do really want to invest in realty, you must have the right things. You cannot get started without knowing you have the necessary investment capital. Also, make sure that you get to know the real estate market and learn about the neighborhoods you are interested in.
Applying this to real estate investment, what you are looking for is not appreciation, but rather 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. If you can, try to leave your cash flow alone in a bank account to create significant savings. Additionally, as your rent goes up over time, so will your cash flow. This is particularly true if your mortgage payments stay the same. You should make sure that at least 20% of the money you get is cash flow. There are some great online resources in terms of calculating your cash flow.
Another option you have is to invest through a real estate investment trust (REIT). This means you need less investing capital up front, but the returns are not as high either. REITs are popular because you are essentially investing in real estate corporations. Hence, you could invest in anything from an apartment block to a retail park. You can find out how well your money is performing through the NASDAQ and stock exchange. Basically, when you invest in a REIT, you are working with a type of mutual fund that looks solely at real estate. Before you start, however, you need to think about a few things. First of all, look into what the economic conditions are of the areas of key holdings. Find out how the REIT has performed in the past. You should also consider 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.