When diving into the real estate investment market, it is important that you are looking into property that can create wealth, in relation to the amount of risk that is involved. By decreasing the amount of time that you need to invest into a property or project, you can capitalize even more on the money you’re taking home. To make sure that you are headed down the right path with your real estate investment venture, there are a few things to look for in the beginning.
Use These Real Estate Investment Tips For Easy, Head-Ache Free Investing
To make the most money, you’ll want to stick closely to these three rules:
Keep Your Cash Flow Coming: Purchasing property means that you will be eliminating money out of your liquid assets, such as stocks, bonds, and CDS, and placing it towards an illiquid asset – real estate. At this point, you have been used to receiving a certain amount of cash return on your liquid investments (5 percent is normal), and you’ll want to make sure that this cash flow remains consistent. In order to accomplish this, you should pro forma your investments and only purchase properties that have cash flow potential. These investment properties should be on the more positive cash-flow ends, and not the negative side of real estate.
Keep Risks Low: It is the nature of real estate to be a high risk investment, but it doesn’t have to be the case for everything you jump into. When you’re looking to minimize your real estate investment risk, steer clear of the following:
- Tenant-In-Common (TIC) Investments
- Development of Real Estate
- Private Real Estate
- Fixer Uppers/Flippers
All of these properties have a higher risk value, and ultimately require more money upfront. Stick with properties that have more established cash flow potential, in order to eliminate the amount of headaches you’ll have in the long run. Make sure to do your research with every property; look into all reports, be diligent with all fees and titles, and analyze the areas you’re looking to purchase in.
Keep Managing At A Minimum: Anything that is going to suck up all your time and energy is probably not worth your money, and not the best real estate investment. In order to free up more of your management time, don’t jump into the following options:
- Vacation Rentals
- Low Quality Properties
- Stagnant Neighborhoods
- College Rentals
It’s safe to say that properties that have been rented previously towards tenants that have consistent rental history will eat up less of your time. Additionally, by being able to make more time for your tenants on their wants and needs, your reputation and relationships with them will last a lifetime, reducing even more hassles and headaches.
Detroit is full of properties and homes that meet all of these criteria. With low prices on initial investments, high demand for consistent cash flow, and loyal tenants, Mutual Property Management can put you in the right direction towards real estate investment in Detroit today!