Compared to other passive investments like mutual investments, real estate investing is a very volatile business. Unlike mutual funds, you have to pay a management fee every single year. There is nothing you can do except watch your investment closely in the papers if you want and decide when to sell it.
The Real Estate Investing Difference
To succeed in real estate investing, you have to treat it as a very serious business. Property and estate agents in Canary Wharf, London know this for a fact. With this kind of investment, there are always tasks you have to do. Every homeowner knows that something always needs some fixing.
This is exactly the same with real estate investments. The property must be well maintained, repairs have to be made in a timely manner, rental fees collected, complaints addressed, tenants screened, and evictions handled accordingly. All of these have to be done properly.
Employing Property Managers
If you are too busy to perform all the ‘jobs’ mentioned above, you can retain the services of a property manager to handle all the work for you. But for a novice real estate investor, this is not a viable option. The fees charged with management can create a huge dent on your investment profits.
Income Property Purchasing Checklist
Before you go ahead and buy that income property you are eyeing, you have to first create a checklist of questions and answer them as honestly as possible before you dive in and take that property.
Here are some questions you have to ask yourself.
1. Am I ready to invest a significant amount of money and in a hard-to-sell market?
2. Can I devote my time to maintain and manage the real estate property?
3. If not, will I have someone to manage the property at a reasonable cost?
4. Do I have the right set of skills to deal with tenants who will lease the property?
5. Am I okay with the added stress of dealing with tenants and other related problems?
6. Do I have to live on the income property’s premises? You will know exactly what is going on, but the downside is you will be very easily accessible to the complaining tenants.
7. Will handling the income property be compatible with my work, family and lifestyle?
8. Am I ready to invest a significant amount of money for regular repairs and maintenance of the property? This is a long-term commitment if you want to keep your property in good shape to be able to attract the right tenants. Your property must also be kept up to the standards required by the local building code in your area.
Answering these questions will provide you with a crystal clear idea of whether or not real estate property investing is perfect for you. Real estate property can be a great investment; however, this is clearly not for everyone. If you finally decide that this is not the right investment for you, try passive incomes like purchasing real estate trusts, stocks and others.