- By Emma Andrews
- Posted January 20, 2021
What You Need to Know Before Becoming a Real Estate Investor
Investing in real estate is often seen as a solid way to move towards becoming financially stable and creating a reliable source of passive income. Becoming a real estate investor isn’t an easy thing to do though. It takes a lot of work, and is far from being a get rich quick scheme. Before you jump into real estate investing with both feet, there are some things you need to know.
How to Stay Profitable
For real estate investing to actually pay off, it has to be profitable. There’s more to it than just purchasing a property, finding tenants, and collecting payment. If you want to be profitable in real estate, you need to carefully calculate the worth of the property and how much you can ask for in rent. If the numbers don’t add up, you aren’t likely to generate any worthwhile profit and what should have been an asset becomes a liability instead. For this reason, according to Roofstock, it’s important to be careful when choosing properties to invest in.
Understand Housing Laws
Beyond choosing a property, there are housing laws you need to understand before you start renting it out. According to Podium, you can’t raise rent during the terms of the lease. The Fair Housing Act states that you are legally disallowed from discriminating against tenants based on sex, race, familial status, color, religion, disability, or country of origin. That means you have to be careful about how you advertise your property as well. The Fair Credit Reporting Act is another federal law landlords need to abide by. There are state-specific laws you’ll need to familiarize yourself with as well.
The Area You Plan to Invest In
In order to make smart investment decisions, it’s necessary to become familiar with the area you plan to invest in. Are the schools good? How close is it to important businesses and services? According to MyMove, you should understand what the crime rate is like and which crimes are most common. Get a feel for what property values are normally like for the area and what rental rates are like as well. These things can give you an idea of what you can expect if you choose to invest there.
If you want to get into real estate investing, one of the best things you can do for yourself is to become as informed as you can. Make sure you know how to stay profitable, understand housing laws, and are familiar with the area you plan to invest in. Doing so will help you make smart investments that become assets instead of liabilities.
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