Many new investors have made the mistake of buying marked-up houses for no money down. They automatically assumed they could earn a profit because no cash was invested! With high mortgage payments and short-term balloon notes, their dreams of becoming rich tycoons quickly turned to nightmares instead. The “free lunch” strategy may work well for selling slick-covered books on cable TV, but in the real world, you won’t buy much value for nothing!
Every once in a while even a dummy make money in real estate! But take my advice; don’t give up your day job thinking it happens too often, because it doesn’t. A far more realistic approach is to learn exactly how and why real estate profits are made to begin with. If you will do this, you’ll in a position to make money in good times and bad alike. Also, you won’t need to depend on inflation to make your profit. Inflation earnings should be a bonus for investing wisely.
The important thing to remember is you can purchase properties with dollars or pay with your personal, skills, but you must always pay. When you are negotiating to buy a property, stop and think about the deal as if you were the seller. Would you sell your real estate for no down payment? The most common reason is the price is too high. That likely means the mortgage payment is too high as well, 50 to 55% of the existing rental income is about right for the mortgage payment.
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