There are no easy, step-by-step instructions for how to invest in houses but if you have some cash flow, real estate and rental homes can be a great way to make some extra money in the long term.
The main benefit of investing in houses is that as inflation and cost of living increases so does rental or sales income, making real estate a stable and profitable investment. Even if a home drops in price over several years, you can still see positive cash flow as the rental income will generally pay the mortgage and may even give you a bit extra. So then, let's talk about how to invest in houses.One of the most important steps one must take before investing in houses is to do your research. Being a landlord can be a very time consuming job, and as the landlord you will be responsible for maintenance and the mortgage, even if nobody is living in the house. Before you invest, take some time to consider all your expenses. If your mortgage is $1000 per month and your rent is $1200 per month, this doesn't necessarily mean you will be making a profit. Tenants will not always occupy the space and you will need to account for maintenance costs.When it comes to maintenance of your investment, many new landlords make the mistake of saving their money rather than making repairs. While this usually increases your profits today, it could cost you bundles down the road. Problems with your tenant are more likely, not to mention the fact that a well-maintained house will draw more rent and will make it easier to find tenants. Another consideration that needs to be made when it comes to how to invest in houses is the tenant. It is crucial to do thorough background checks on your prospective tenants. This includes reference checks and in some cases criminal background checks. This research may cost you a bit of time and money, but will save you stress and possibly lost earnings from missed or unpaid rent in the future. Also, every landlord can probably share details of tenants destroying property, which is ultimately an unwanted cost to you. Do your background checks up front, and rest easy knowing you have a reliable and responsible tenant. Some home owners who are renting their property will prefer to work through a property management company to save themselves the time and effort of caring for tenants. Finally, new landlords should expect that positive cash flow may not be immediate. Especially in Canadian urban centres, where housing prices have steadily risen over the past several years, it may take some time to find a suitable tenant and to start seeing the money come in. As such, you really need to be prepared to have more cash going out than coming in, especially in the beginning. Nevertheless, once you have reliable tenants, investing in houses is a great way to make some extra cash.