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Investing in real estate can be a profitable way to grow your wealth, but it isn’t without its challenges. The guide below from South Jersey Real Estate Investors Association will answer your questions about investing in real estate as a beginner.
The Perfect Investment Property
Investing in real estate can be a great way to earn passive income; however, not all properties are created equal. Ideally, you’ll want to look for properties that generate positive cash flow — so you can cover your mortgage payments with your rental income alone.
Financing Your Investment Property
Once you’ve chosen a rental property and made sure it’s a good investment, you'll need to think about how you’re going to pay for it. There are various ways to finance your investment property, including buying with cash, using all or part of your existing home as collateral, or taking out a loan from a bank or mortgage company. If you’re planning on taking out a mortgage, be sure to review PennyMac loans and rates to get an idea of how much you can afford to spend.
Finding Help With Managing or Renting
One of your biggest tasks as a landlord is overseeing your property and addressing any issues that come up — whether it's handling maintenance, dealing with tenant questions, or deciding when to raise rents. Unless you’re planning on managing your investment property yourself, you’ll need to hire someone to help. For example, a property management company can handle many of these issues for you for a price.
Considering Multifamily Properties
Multifamily homes are properties containing two or more homes within them — such as duplexes, apartments, and townhomes. If the person who owns this property lives in one of those apartments, it’s considered an owner-occupied property.If you're purchasing a multifamily property, it might be worth looking into whether any incentives or tax benefits are available. For example, some states have programs that offer special breaks for buyers who purchase a multifamily property and rent to low-income tenants. If you're interested in taking advantage of any such program, make sure to consult with an accountant who specializes in real estate taxes.
Use Auction Websites
Take advantage of auction websites, where you can search for foreclosed homes. In many cases, these properties will be owned by banks and sold at a fraction of their original price
— and they’ll sell fast, so you’ll have to act quickly if you see something worth buying.
Save for Your Down Payment and Renovations
If you’re ready to purchase your first investment property, it might be necessary to have a down payment of at least 20%. Down payments can be expensive, but many online services offer loan assistance for new investors who want help getting started. Also, have enough money saved up for repairs and renovations.
A Profitable Venture
It can be daunting to invest in real estate, especially when you're just starting. However, if
you educate yourself and follow a plan, it can be a profitable venture for you and your family.
Join the South Jersey Real Estate Investors Association for networking opportunities and to gain practical knowledge of real estate investing.