You have seen all of the articles that say this is this best time, probably in our lifetime, to buy a home. If it is the best time to buy a home for yourself then is it a good time to invest in Plano Real estate? If you're financially able to spend time doing research, and you have cash to burn, then investing in real estate is likely to be a good financial decision for you. There are a number of excellent reasons for a part-time real estate investing business.
Can you can do real estate investing part-time: Yes. Before the Internet, this wasn't as easy thing to do. Now you can do your own due diligence which used to be the biggest time consumers in real estate investing. The Internet has opened the door to anyone with limited time to spend on the process. What used to take a full day of tramping through courthouse offices in any DFW real estate city and looking through several dozen records can now usually be accomplished in an hour or so on the Internet at any time of day or night.
Costs have nothing to do with income: Doing everything right in the real estate investment process and getting tenants into the property will not guarantee success. An unexpected vacancy or two for longer than anticipated has ruined many new real estate investors. The mortgage, property taxes, utilities and upkeep costs continue, even when the rental income stops. At those times of stress, regular income from the property is nonexistent and you will be paying these costs out of your own pocket. Even when buying Dallas foreclosures where many times your initial investment is less you can still find yourself in a negative cash flow situation.
Don’t make investment decisions under stress: Getting into a negative cash flow situation creates much stress. Too many real estate investors have lost money selling properties at the wrong time for the wrong reasons. Keep your whit anytime you have to make a decision about your real estate investment.
Is Starting Part-time easier? Taking on your real estate investments slowly and carefully at first may save you financially when you find it's not as you expected. Real estate investing part-time is definitely the way to go for most investors. Keep that steady income for stress reduction and backup funding. As you learn the business and grow your rental property portfolio you may find yourself someday where you can simply walk away from that job that you detest.
Below is some great information about rental properties:
• Property improvement for increased equity - Many investors purchase properties at a discount because they could use some improvements in condition or amenities. They have calculated that the value of the improvements will exceed the cost, resulting in an immediate increase in equity.
• Rental yield - This is the percentage yield from direct rental income, and can be calculated as either gross or net. To calculate the Net Rental Yield, take the expenses, taxes and other costs into account, and divide by the property cost/value. It could turn out to be a negative cash flow, as it doesn't take mortgage payments into account. Many investors prefer to look at the cash-on-cash yields. Though the investor can purchase and manage for a yield on this single component that exceeds average stock or bond dividend yields, it is only one of the ways in which real estate returns on your investment.
• Appreciation - Properties normally appreciate in value as inflation increases. Increased value can mean sale and reinvestment in higher valued properties. This is the second, and a historically proven value component of real estate investment return.
• Inflation – Rent Friendly - Rents generally increase with inflation, while mortgage payments on the property remain stable. This increases cash flow, with more rent income without increased expense for holding the property. When inflation is up, it can also mean more renters, as the affordability of homes can be negatively impacted by inflation. More renters increases demand, so rents will generally increase.
• Leverage - Using leverage provides much greater returns. Using $200,000 to purchase three properties with down payments, instead of one for $200,000 cash, can greatly increase your returns. Keep in mind that all leverage involves risk, so the successful investor must understand how this leverage will impact their real estate investments.
• Paying down the mortgage - Amortization, or paying down the mortgage, frees up more investment resources to increase leverage. Some investors use increased equity in one property to free up funds to invest in others. One of the best things about owning rental property is that your tenants are the ones paying down your mortgage.
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