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It's common for most investors, at some point in their investing careers, to consider making an investment in real estate. Real estate markets and stock markets often move in [link widoczny dla zalogowanych] different directions, thereby giving real estate investors an opportunity to avoid some of the issues and uncertainties that plague the broad stock market. In addition, real estate can offer significant tax and cash flow benefits.
If you're considering making your first real estate investment, here are some things to consider when you're looking for that initial property.
How Large is Your Overall Portfolio?
Having some degree of diversification in your overall investment portfolio is important to reducing the risk of substantial [link widoczny dla zalogowanych] loss if a particular asset class experiences broad difficulties. If the value of your overall investment portfolio is relatively low, then you should probably look to make your first investment property a correspondingly inexpensive one. If you were to commit all or most of your investment portfolio to a single property, then you run greater risks of loss by tying everything to property. Furthermore, you may face liquidity difficulties if you ever need to withdraw money from your investments to pay for emergency personal expenses.
What's the Current Status of the Property?
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Furthermore, what's the condition of the property? If you're capable of making repairs and upgrades yourself, then you may be able to realize a greater investment upside by looking for "fixer upper" type properties. On the other hand, if you want a minimum of burden on your time and energy, then you probably want to direct your search towards "move in ready" properties.
How Good is Your Credit?
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Will You Be Managing it Yourself?
One key consideration when it comes to investment [link widoczny dla zalogowanych] property is figuring out how it will be managed. This will include not only making routine repairs and maintenance [link widoczny dla zalogowanych] on the property, but also finding qualified tenants, documenting your relationship with a lease agreement, setting up an escrow account [link widoczny dla zalogowanych] for the [link widoczny dla zalogowanych] security deposit, cashing rent checks and responding to tenant complaints and issues.
Some investors choose to handle these tasks themselves, [link widoczny dla zalogowanych] while others elect to retain a professional property manager. If you plan to manage your first investment property yourself, be sure that you're adequately prepared, and that the likely maintenance and repair tasks are within your abilities.
Paul Beauchemin is a real estate investor and entrepreneur. He created the website about how you should buy rental property to help people desiring a reasonable alternative to [link widoczny dla zalogowanych] stock market investment. For free real estate investing info visit
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