When it comes to investing in real estate, there are two pitfalls that can impact your cash flow and ROI. Below are two aspects you need to keep in mind before you make any Real estate investment decisions:
- Overpaying: Purchasing an investment property, especially if you are a first-time property investor can be a challenge if you do not have good knowledge of the market.
- Stick to your budget
You must stick to your budget and make sure the numbers make sense to get the best outcome: the one that matches your overall goals.
- Be clear about your goals
Be clear about the goal of this investment. Is it to generate positive cash flow for passive income?
Is it a long term equity building strategy or some combination of both?
- Remove emotions from the business equation
It is critical to disconnect the emotional aspect and be very objective when deciding on which property to invest in; otherwise, you may end up overpaying for your investment.
Before investing in a particular property, make sure you run the numbers, gather as much data as you can, build a spreadsheet and review the number. Be conservative in your estimations for categories like repairs and maintenance, and get solid figures for utilities and insurance costs for money borrowed. Calculate the costs for renovations to have the units made rent ready, run a rental analysis and make sure each units is not over-leveraged.
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