Buying and managing properties could be very tough and could end up with some big holes in your pockets.
If you buy properties in neighborhoods with high criminal rates and bad school districts just because they are cheap and look good you are in for trouble.
You may face incidents where tenants stop paying the rent without any further notice, you may need to evict tenants and pay legal and court fees while you have to pay all of the expenses (mortgage payments, property taxes, insurance, HOA and management) related to the property out of pocket.
You also might find your property in a bad condition, with lots of damage and negligence caused by your tenants by the time they leave. To make things even worse, if you’re not able to evict your tenants fast enough while you’re accumulating mortgage debts, your property might be foreclosed by the bank. Not only that, you could lose your property and your equity and that could ultimately ruin your credit score for a long time…
Having said that, this is not necessarily the route you’d have to go through if you do things right!
The facts are that millions of people around the globe are getting wealthy investing in rental properties, enjoying constant passive income and even leave a great legacy to the next generation.
First thing first, you should consult with experts who have been in the business long enough and have implemented this methods successfully.
Once you have done a thorough research you have to have very good strategy and a proven criteria in place.
For instance, you should understand the demographics of the area where you want to invest, the average income your potential tenants would have, the average rent, the kind of industries that will support these people, the occupancy and vacancy rates in the area etc.
Once you’ve done your research you want to calculate the rate of return on your investment (ROI), and the cashflow (NOI) in order to understand if this is really a money maker.
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