Knowing how to avoid mistakes commonly made by real estate investors is fundamental toward achieving investing success. However, even seasoned investors are prone to making some mistakes that while subtle, can still have significant effects.
To illustrate, let’s say you’re putting twenty percent down on a property. This money is coming out of your pocket which you have eighty percent leverage. You must use this leverage wisely. For example, if you were to use about $200K for five properties and put down twenty percent on each one, your cash flow may rough amount $300 monthly once you add mortgage payment to the equation, but since $300 per home, you cash flow totals $1,500 a month, or $18,000 a year. That’s a return on investment of nine percent which isn’t bad and represents how leverage can work for you despite the risks.
A fundamental concept of real estate remains location. For investment property, it is particularly important to purchase where the demand is. This means a healthy job market, top-rated schools, and lots of activities. It pays to carefully study an area, see if it’s something people will be interested in, and do the number crunching before making any financial moves. You want to ensure the rent can be paid by the people. Hence, a so-called “great deal” in an economically depressed area may not be all that it seems.
This update is by hard money loans Miami company Monroe Funding Corporation, a direct equity lender serving clients throughout Central and South Florida. We specialize in first mortgages on non-owner occupied residential and commercial property investments as well as real estate loan options. Our fast and flexible loan programs get you to the closing table quickly and professionally. For more information on hard money lenders Palm Beach or Orlando hard money lending, please call 954-816-0388 or fill out our application.