Can you afford an Investment Property?

Cedar Cottage by Skaneateles Suites
Creative Commons License photo credit: Skaneateles Suites

Most people dream about owning a home. But there are some that want more; they want to get involved with real estate investing. If this sounds like you, the first thing that you must do is consider whether or not you can afford an investment property. On the surface a good deal may look like a sure thing, but you must dig down deeper in order to ensure that you are not spending money that you don?t have.

The biggest mistake that you can make when buying an investment property is thinking that the rent you pull in will pay the mortgage, taxes, and all other bills that go along with your purchase. Is it true that the rent you receive can help? It sure is. But what if your investment property sits vacant for a few months at a time? What if you need to make a major repair that you did not see coming? These are all circumstances that you need to plan for. Generally speaking, you should be able to afford your investment property without having to rely on the income that is being generated through renting. This way, if something goes wrong you can pay the mortgage without any issue.

Of course, an investment property costs much more than money; it will also take up a lot of your time. If you are not ready to give up some of your free time you should think twice about buying an investment property. Remember, tenants are going to have questions, repairs will be needed, and you will be responsible for tasks such as collecting rent, paying taxes, etc.

If you have the money, time and desire, you may want to think about buying an investment property. Many millionaires have made their riches in real estate. Do you have the tools to be next?