The perfect real estate investment is one that has high returns and very low risks. Only if you know how to make smart choices will you be able to achieve this. The following three things make for an excellent real estate investment to help you get started.
Do not invest in real estate before you actually have everything you need. You cannot get started without knowing you have the necessary investment capital. Also, you need to learn about the real estate market and you need to get to know a certain neighborhood.
If you use this knowledge and apply it to real estate, you need to look for cash flow rather than appreciation. Calculating your cash flow means you need to work out how much money from your rental is left after you have paid for all the necessary expenses. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Plus, your cash flow can increase as rent prices go up over time. This is particularly true if your mortgage payments stay the same. A good cash flow is at least 20% of the money you get in overall. There are a number of free to use cash flow calculators available online and you should use these at much as possible.
You can also decide to look into a real estate investment trust (REIT). This means you need less investing capital up front, but the returns are not as high either. REITs are popular because you are essentially investing in real estate corporations. Through a REIT, you can invest in anything ranging from an industrial park to a shopping mall. A REIT is also listed on the stock exchange and NASDAQ. Basically, they are like mutual funds but focus solely on real estate. There are a few things to think about, however. Look into the economic conditions of the locations of the key holdings first. Find out how the REIT has performed in the past. You should also consider their future plans. Also, you need to look into who manages the REIT and how they have performed. Last but not least, consider what the real estate market looks like and how this could affect how your REIT will perform.