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Fool Proof Guide to Investing in Real Estate

Aug 20, 2008
Many people assume that making money by investing in real estate is one of the easiest forms of investment there is. This is partly true. It is possible to make a reasonable profit with a modest budget and plenty of blood, sweat and tears! It?s possible to buy a property, renovate it and sell it for a nice big profit.

Just because this is easier than other investments it doesn?t mean that it?s easy. The most common problem preventing people making money out of investing in real estate is because of the steep learning curve. Investing in real estate can be very complicated, this is true wherever you live. You can lose money very quickly if you are not careful, it?s important to make sure that you do your homework.

In order to simplify the process of investing in real estate there are some important things which you need to consider. Before you start investing any of your hard earned money, you need to invest some of your time. Just have a think about what you want to achieve. Make sure you set realistic goals. It's worth bearing in mind however that real estate values can fall quite steeply, they don't always rise.

When you have decided how much of a commitment of time and money you want to make you should write it down on a piece of paper. Create a detailed business plan which looks from 1 to 5 years into the future. You should review this after 6 months, and then again after 2 years. This plan should show you how much capital you can invest, this will vary depending on whether you plan on using your primary residence as your first investment property. If you have less than $10,000 to start with then you are either looking at buying a house in need of serious renovation or using your own home.

It is possible to buy another property without having to put any money down, it just costs a couple of thousand dollars for the closing costs, as long as you have a good credit history. However for this to be successful the market would have to rise immediately and then you can sell. It's very risky and would result in some nasty taxes having to be paid. Another option would be to pay monthly payments in which case you may have to pay more money for repairs. This is fairly risky and could be expensive. You could lose much more than you originally invested because you are obligated to repay the entire sum, not just the amount of money you invested.

You should also say how much risk you are willing to accept in this plan. Make sure that you are completely honest when saying this, as it could affect which properties are suitable for you. People have different risk willingness for different rates of return. You will need to use a reliable lender, be willing to learn about the market, have professionals look over your contracts, be aware of tax requirements and legal rights.

If you have done all of your homework and still think it?s a good idea to invest, then go for it. Some people can make a full time living by investing in real estate.
About the Author
Jerry Blackburn is publishing principally for http://www.alicante-spain.com , an internet site about costa blanca property and spanish property costa blanca. His work on costa blanca property for sale can be found on his website .
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