Is Real Estate a Good Investment?

Real estate investment is a significant financial decision, but is it right for you? Although real estate investments have great potential, such as passive income and generally building wealth, they have many drawbacks, such as maintenance and expenses. A bad investment can affect your credit, bills, and more. Here are some things you need to know about real estate investing to see if it's the right decision for you.

Money Upfront

Investing outside your budget can turn a potential passive income into a financial burden.

One of the first questions you should ask when investing is, "can I afford it?" Real estate can be risky yet profitable, so you need to ensure you are equipped with the right resources to make sure real estate is the best investment for you. Real estate may not be your investment if you can't afford to pay for your investment without a significant down payment. Make sure the investment is something you can afford without a high-interest rate loan. Investing outside your budget can turn a potential passive income into a financial burden. You certainly don’t want to become “house poor” or “house broke,” which is what happens when your home expenses (mortgage, taxes, insurance, maintenance, etc.) represent too much of your overall monthly expenses.

Research Location

With an investment like real estate, the location is crucial! Research the property deeds, the value of other properties near, and future development plans near the property. Construction of roads or buildings near your property can affect its value, so research thoroughly about what's to come. In addition, researching properties nearby can give you an idea of how your property compares to the others. Location is a big part of how much the investment will cost and affects the future selling price.How long has the house been on the market?

Research the property deeds, the value of other properties near, and future development plans near the property.

Looking at the house’s lifespan on the market gives you a lot of information about the property. Ask yourself, “If a home has been on the market for a while with a low price, what could be the reason? Is something wrong with the property?” On the other hand, act fast if a home has been recently added to the market! A good deal on a home is hard to come by and goes by fast, so look into those new additions to the market and see if they are worth your attention.

Start Small

It can be tempting to start with a more significant investment to get a more considerable gain, but start with what you can afford!

The more you invest, the more it can pay off, but don't invest what you cant afford! Start small and work your way up if it's your first investment. A typical first real estate investment is an apartment or duplex where you can rent out a part of your unit to other tenants. Although this means you will be living in the same property as your tenants, it's a good first start in the real estate investment world. It can be tempting to start with a more significant investment to get a more considerable gain, but start with what you can afford! Access your budget and make sure you can cover the entire cost. It can be very costly in the long run if you make an investment you can't afford. Once your first investments start doing well, you can begin to branch out and use your profits to make more significant investments!

Need Help?

Real estate can be a daunting investment, but you don't have to do it alone! Dena Musfy Real Estate Group has helped countless buyers find the perfect home to fit their needs within their budget. Dena is a master negotiation expert and has expert knowledge of Houston real estate and the housing market. Don't hesitate to send us a message or call today. You can fill out an inquiry form here and immediately start your future with Dena Musfy Real Estate Group!