Make That Passive Income: 5 Signs You’re Ready to Start Investing in Real Estate


Investing in real estate is one of the most efficient ways to increase your net worth. Additionally, it offers you the opportunity to exponentially grow the amount of money that you make from this endeavor. However, not everybody understands what’s required to start investing in real estate.

Let’s explore some of the most notable signs that you are ready to begin.

1. You Have Plenty of Money Saved up

As you might guess, this is the first of many criteria that you will need to satisfy.

After all, you can’t invest your money if you have no money to invest. The good news is that you don’t need to have hundreds of thousands of dollars sitting in the bank in order to make some serious money through real estate investment.

In fact, it’s entirely possible to experience significant returns on less than $50,000. You can contribute even less if you plan on going in on a property with other people.

Regardless, you will still need at least a sizable savings account in order to get started in this industry. This is due to the fact that you aren’t able to purchase a rental property with a credit card. So, keep this in mind before starting off in real estate investing.

2. Ready for The Extra Responsibility

Many people have the misconception that you can simply throw money at a rental property without any extra effort. The truth is that real estate investment comes with plenty of extra responsibility. Not only are you tasked with finding a suitable rental property, but you will also need to find the appropriate tenants.

You also have numerous other obligations as a property owner. For instance, you will be responsible for dealing with certain types of maintenance. Those who simply wish to flip a home also have their work cut out for them.

This involves hiring the right contractors to improve problem areas while also regulating your own personal schedule. As you can tell, real estate investment can quickly become overwhelming for those who are not prepared.

3. You Understand What to Look for in a Property

Not all properties are created equal.

Some have the potential to provide a much greater return than others. The key to real estate investment success is understanding the attributes of a good property.

This involves taking a look at numerous factors, such as the current state of the market and its projected growth over the next decade. You also need to be aware of the 1% rule. This is a philosophy that declares you should rent a property to tenants for at least 1% of its purchase price.

Under these circumstances, you should be able to pay your mortgage with the rental payments that you receive. Additionally, you should be fully prepared to pay at least 50% of the income you received from a single-family home on various expenses. These include upkeep, insurance, taxes, and operating costs.

It’s also important to budget for potential vacancies, as these are often unpredictable.

4. You Know Which Professionals to Work With

It’s exceedingly difficult to succeed in real estate investment on your own. In fact, even those who have personal experience in the industry still often choose to outsource to professionals.

Oftentimes, this means looking for the ideal real estate agent and property management company. During your search, it’s imperative that you consider their past reputation.

This will provide you with much-needed insight into the type of results that you can expect from them. When reading online reviews, be wary of the feedback that may have been planted dishonestly. To elaborate, reviews that are overly positive may not be entirely truthful and could be used as a form of promotion.

Similarly, someone who had an isolated poor experience might leave a scathing review. Oftentimes, neither of these are indicative of the service you will experience. Found yourself in a position where you need to sell your home as fast as possible?

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5. You Have Concrete Goals for Your Investment

You need to take your goals a step further than simply “I want to invest in real estate.”

Instead, you’ll need to have a list of concrete numbers and performance metrics that you wish to reach. In context, you’ll need to determine whether you simply want to rent a home to tenants or eventually flip the property.

Similarly, you also have the opportunity to slowly accumulate properties before participating in wholesaling. Having an established plan will help you develop your course of action and ensure that it is conducive to your goals. In the event that you do not have a comprehensive plan yet, it’s best to hold off on investing until you do.

Otherwise, you run the risk of falling short of your intended metrics or even losing money.

Ready to Start Investing in Real Estate?

As long as you are fully prepared for this financial endeavor, you will likely find that your returns far exceed what you thought was possible. Keep the above information in mind about whether or not you are ready to start investing in real estate. This will allow you to make the decision that is best for you and your future.

Looking for more tips that can help you out later on? Check out the rest of our blog for plenty of more useful information you can use.