Basic tips for investing in the business

Home prices are constantly fluctuating, and it’s pretty hard to score the right sale. Many people have lost a lot of money by trading real estate, especially in the last couple of years. Hiring a professional is your safest bet; however, if you’re unable to do so, there are a few valuable tips you can follow and ease your troubles greatly.

Location matters

There’s an old saying in this business – “Location matters,” and it’s one of the most accurate ones. A good location is mandatory if you want to make a good investment. Before you take a loan, make sure that you’re investing in a good neighborhood.

There is a common principle you’ll come across often while you’re searching for a new home and that’s – look for the worst house on the best street. You want to do it because it offers you an opportunity to build equity. If you have a house in a good neighborhood, but in an unenviable condition, you can invest some money for renovation, and sell it to someone who wants a ready-to-move-in house. The professionals call this “Fix and flip.”

The 1% rule

1%If you have plans to buy a property and then rent it, this is a rule you should always follow. It’s not as complicated as it seems, it’s quite simple, and it helps you to decide whether or not the house is worth investing in.

The definition is simple – Income producing property must earn at least 1% of its value per month. For example, if you want to buy a house for $100000, then the monthly rental should be at least $1000, or 1% of the overall value. If you put this into perspective, you’ll return your investment in 100 months or around eight years.

Check your credit report

You’ll probably need to borrow some money to buy real estate. Make sure to check your credit report and eligibility before starting the process, or you’ll have an unpleasant surprise if you’re not qualified for a loan.