Investing in real estate is a great way to earn extra income. It is also a great way to start a new business and a new life. The allure of the industry is easy to understand. Television ads and radio ads make it seem like all you have to do is sell a few properties and then you are set for the rest of your life. While there is certainly a lot of money to be made in the real estate business, there are also a lot of pitfalls and many more stories of failure and ruin than there are stories of success. While there is no such thing as a sure thing, if you are willing to study hard, work hard, and follow a few tips, you could be a success story in the real estate investment world. With so much Orlando property available the options are almost endless. Here are a few things to remember along the way.
1. Location, Location, Location
Almost everyone has heard this adage used before and they simply shrug it off. Location really does matter. You might find a great property with an unbelievable price tag but you soon find that it is located in the middle of a gang war. What good will this property be to you? The best advice you may ever hear is that you need to look for the worst homes on the best streets. Why is this important? This philosophy will allow you to find established neighborhoods that have the potential to add value. You are not looking for a slum to fix and sale. You are looking for a home that can grow in value as you invest in the property. Always take the time to look for the right property in the best neighborhoods.
2. Buy Low
This sounds simple enough but it is not always the case. Far too many investors fall in love with a particular property in Orlando and are willing to pay whatever it takes to secure that estate. This tactic rarely pays off in the end. In most cases you will over-leverage yourself and end up running out of money. This is the most common mistake that investors make. Orlando property can be very expensive but there are many diamonds in the rough. Look for the homes that need some repairs and always remember that when a home is properly refurbished, your ROI could be as much as 2 for 1.
3. Understand Your Tax Benefits and Liabilities
When you take the plunge into real estate investment you are placing yourself in a new world of tax benefits and tax liabilities. Real estate investment, in the eyes of the Federal Government, is a business all on its own. This means that you are going to have to file the proper paperwork with the tax office in your area. However, you are also going to be the beneficiary of some great tax benefits. In order to fully understand the benefits that await you, it is important that you have an accountant that can walk you through the process.
4. Know Your Credit Report
Banks are not as willing to loan money for a home that is not your primary residence. This means your credit needs to be in excellent condition for anyone to consider lending to you. Take the time to study your report and look for any issues that could be potential mistakes. By finding these mistakes and rectifying them you are putting yourself in a better position to continue your dream of investing in real estate.
5. Math is Your Friend
Property in Orlando is some of the most highly sought after in the state. To that end, you need to be aware of how to price your rental property. A general rule of thumb is known as the 1% rule. This rule simply means that if your home is valued at $150,000 then you need to bring in 1% of that value every month, or $1,500.
Real estate investment is more involved than simply buying and selling. You must have a clear understanding of the benefits, the risks, and the rewards. However, you also need to take the time to do your homework. Being prepared will give you a much better chance of success when it comes to investing in properties.