Is Real Estate Easy Money?
Is Real Estate Easy Money?
Everything you need to know about investing the right way
You may have heard about people earning huge returns in real estate recently. Or, you’ve seen it on television in one of the myriad shows that show home improvement turnarounds for profit. The numbers can sound staggering and enticing. But can it really be as simple as it is on TV?
In reality, nothing is as simple as it appears on TV, and real estate is not exception. For every minute you see on screen, there can be hours of work off screen. The good news is however, that real estate can be incredibly lucrative, if a property is purchased and handled the right way.
It’s a pretty simple formula, really. First, find the right property for you, one you’re comfortable owning. Next, a little bit of due diligence and some simple math can make sure the numbers work out in favor of the right profit. And that’s pretty much it. The other good news is that there are numerous professionals who know the ins-and-outs of a good real estate investment and are more than willing to help you.
Every investor has different needs based on experience level, budget, and the kind of property they are looking for. When considering where to invest, focus on areas near you with home prices you’re comfortable with. You’ll feel more comfortable with your investment if it’s in an area you know well. Investment success is largely dependent upon a thorough analysis of certain criteria for each property. Luckily, there are real estate agents who are trained to help you find the right properties for you.
And when it comes to real estate investing, cash flow is king. Calculating cash flow is easy. Cash flow is simply the amount of money you will see from rent at the end of a month (or year) after all expenses, including your mortgage payments, have been paid.
- Estimate monthly rental income. This is best done by contacting a real estate agent with specialized training for real estate investing and asking for average rental prices in the area.
- Subtract estimated monthly expenses from rental income. This number will be your net operating income.
- Subtract your mortgage payment from the net operating income. Whatever’s left is your monthly cash flow!
By researching the area and working the numbers, you can find the property right for you. And a good real estate agent can help you market the property and find good, reliable tenants. Or, if you’re a more experienced investor and are looking to rehab and resell a property for profit, a good agent can help you find the right property, determine After Repair Value and help market and sell the property quickly so that your holding costs don’t eat into your profits. Having a team of trusted professionals behind you can make real estate investment easy, almost as easy as what you’ve seen on TV!