Last time, we talked about how to get started in your own business or franchise. Today we want to discuss how to jump start your passive income by investing in rental property.
You may ask why you should think about investing in real estate now. The daily news is ripe with horror stories of houses in foreclosure, people getting slammed by increases in their adjustable-rate mortgages, and others struggling to sell their houses in this down market.
Believe it or not, that’s why we think now is a great time to buy! Relative to historical norms, things are not as bad now as they were good a little while ago. We’re comparing now to one of the most lucrative markets for sellers in history! Take time to note the word “sellers” in the prior sentence.
There’s less competition for property today. It’s a buyer’s market.
That’s why we think you should buy now.
We’ll assume you’re convinced – where should you start?
Start by buying your own home.
In the past, financial planners often recommended renting and investing in other assets, such as stocks. Historically, stocks have outperformed real estate. The problem – the investing part was voluntary.
Buying a home is a commitment. It forces you to save. And if you’re like most of us, you need that “forced” part. So as you pay your mortgage, month after month, you’re reducing your outstanding debt. That’s why, on average …
… homeowners are significantly wealthier than renters.
So owning your own home is the foundation for creating wealth. Now you’re almost ready for the next big step. Remember our discussion of 38 getting aggressively passive]? You’ve found money from watching your spending and paying off debt. Keep piling that money up to prepare for your next move.
Buy your first investment property.
Your next real estate purchase may be your first rental property. Or it may be your next home. Consider moving up to a nicer place and renting out your first one.
Either way, be sure you have more money coming in than going out. Hook up with a good realtor who can help you determine what your rent should be. Now, estimate your bills – property taxes, insurance, mortgage payment, and all the others. If you don’t project having money left over, don’t buy that property – find another one!
Don’t start without a cash stash.
Owning real estate comes with its risks. For example, what if your property suddenly requires major repairs? As with any business, don’t invest in real estate unless you have a cash stash. If you don’t have one, find a partner who does. Otherwise, you may lose everything.
Our quote today comes from the Australian author, Noel Whittaker.
“Becoming wealthy is like playing Monopoly …
… the person who can accumulate the most assets wins the game.”
So roll the dice, take a chance, pass GO, and collect more than $200! It’s not just play money!
Next time, we’ll look at some of the things that can go wrong – lessons from a bankrupt business owner, who happened to be a real estate speculator. Until then, here’s to your bigg success!