Real Estate: Investing in the Land
Real estate investing can be a gamble, however, with the risk comes an opportunity for reward. Investing in real estate can take multiple forms, each with its own quirks.
- Buying to Resell
This can range from buying property cheap that needs fixed up or renovated to resell later for a higher price, to acquiring property to hang on to until the market changes and naturally becomes a more expensive piece of property. Investing with the need to fix-up typically is done with the intent to flip the property as quickly as possible: purchase, repair, and resell.
- Buying to Rent
If a quick return on your investment isn’t desired; buying a property to rent out can yield long-term returns. Whether something as basic as a house or as intense as a business complex, collecting rent is a relatively easy way to gain some income. However, renting also means long-term responsibility—you’re the one who has to upkeep the property.
Regardless of which general method you decide to utilize, you’re likely going to need to go into debt. Navigating your options for acquiring a loan is one of the hardest parts getting started in real estate investing.
Your Current Debt Situation
If you’re a normal American, you have other debts you’re paying off. Debt calculator can help you decide how your current debt situation actually looks. One of the common debts people have is the money borrowed to purchase a home. While a home loan calculator will allow you to figure out how your mortgage payments are going, you likely have other debt sources. A multi-category debt repayment calculator will let you plug in various debt sources to see where you stand.
Knowing the impact of your current debt situation will allow you to better understand how another loan source actually impacts your month-to-month financial situation. One option is to consolidate your loans; use a debt consolidation calculator to see if that makes your payments better.
You will need to take into consideration the amount of debt you’re willing to take on and the ultimate end result of the property purchase (resell versus rent), not to mention whether you’re targeting residential or commercial and the location of the property.
Apply for a Loan
While the bureaucratic steps are obnoxious, the bank should be able to guide you through the process to make it relatively pain-free. As you find out the specific details of your loan, utilizing a debt repayment calculator will help you analyze the long-term impact of the loan.
The bank won’t care if you’ve sold or rented out the property. You’ll still need to start repaying the loan. A mortgage loan calculator will enable you to keep on top of your loan finances. Make sure you understand all of the details of your loan, including whether the interest rates can change and if there are pre-payment penalties.