If you want to invest in real estate, you probably want to make money as quickly as possible, with as little risk as possible. This is only possible if you know how to make smart choices. Luckily, if you know the three things that indicate a great real estate investment, you are a step closer to achieving that.
First, you need something with a good return. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. You need to make sure that the rate of return you get is similar to the one you were getting through liquid investments. In other words, you want a good cash flow property, and not a property that will only cost you more money.
Applying this to real estate investment, what you are looking for is not appreciation, but rather cash flow. The cash flow of a property is the money you have left over from the rental price after you have paid for all the necessary bills in relation to that property. You can save up your cash flow and see a really fantastic pot of money building up. As rent prices go up, your cash flow will rise too. If your mortgage payments stay the same, then your cash flow will be even better. The best cash flow is at least 20% of your overall income from the property. Make sure you take advantage of the online availability of cash flow calculators.
You could also look for REITs (real estate investment rrusts). REITs are popular because they are cheaper to get involved in, but the returns you will see are not as high either. Through a REIT, you basically invest in real estate corporations. This includes things such as shopping malls and industrial complexes. You can find the value of a REIT on the stock exchange and NASDAQ. A REIT, essentially, is like a mutual fund that only looks at real estate. There are a few things to think about, however. Consider the key holdings’ economic conditions for starters. Find out how the REIT has performed in the past. You should also investigate their future plans. Also, you need to look into who manages the REIT and how they have performed. Finally, what is the state of the current real estate market and how will the REIT respond to any changes in this market?