Should I Invest in Real Estate?
Investing in real estate can be a great way to accumulate wealth but its also possible to lose money in real estate.
Sue Goldthorp from Visulate has developed a series of questions to help first time investors evaluate their goals.
- Examine your current investments. How many do you have and how are they performing? What were your goals when you invested in them? Have they achieved this? Is it time to sell some of them and reinvest the proceeds?
- How much debt do you have? Is it being used to generate income? What rates are you paying? Should you pay down existing debts before you start investing in real estate?
- What are your investment goals? Are they long term or short term?
- How much cash do you have to invest? Do you own properties with equity that you could borrow against? Do you own other assets that you could borrow against?
- How much cash do you need to retain for emergencies - e.g. lost income, new roof or medical bills?
- What are your cash flow requirements? Does the property need to pay for itself? If not where will the other income come from? How secure is that income?
- Set an investment budget based on your investable cash, cash flow requirements and comfort level. More leverage typically produces greater appreciation but less cash flow.