How Much Do You Need to Invest in Real Estate?

Tuesday, March 22, 2022

Did you know that investing in real estate is one of the most effective ways to build wealth? You profit as your properties appreciate, and you're blessed with a steady stream of rent payments in the meantime. 

It's a great way to create passive income, but is it easy to get started? How much do you need to invest in real estate? 

We're going to talk about real estate investing for beginners today, exploring the topic of initial capital for your investments. Hopefully, the ideas below will give you a better idea of how much money you need to start buying real estate.

How Much Do You Need to Invest in Real Estate in Houston?

The answer to that question is a complicated one. The initial investment you need depends on the cost of the property in question. Further, the requirements of that property (renovations, updates, repairs) affect the initial investment as well. 

The cost of properties in your area, as well as the rent prices in that neighborhood, will affect your costs.

In any case, you want to think about how much money you'll need for the down payment. That's the first figure you can work with. Most properties require that buyers put roughly 20% forward as a down payment

That's the rule for most banks and other private lenders. There are some exceptions for first-time homebuyers or property owners. In those cases, you might find lenders that will allow you to get your foot in the door with investments of less than 10%. 

Beyond that, there are expenses involved in preparing your property for rental. You have to make sure that everything is up to code, you might want to improve the property to make it more valuable, and there could be other odds and ends that come up at this stage.

Once you've got the property rented, you have to think about how you're going to account for maintenance.

Managing Your Properties

It's difficult to manage a property on your own unless you're a skilled handyperson. A lot of issues can come up, and all of those problems might require specialized labor. 

Those costs fall upon you, and you have to be speedy about repairs to ensure that the tenant has a safe place to live. Then there's communication, renter's rights, background checks, and a million other things that will come up. 

That list of duties can get very expensive when you're just shooting from the hip. The best alternative is to work with a property management company

These are professionals with the resources for repairs, the knowledge to treat your tenants well, and all of the other skills that landlords need. They charge a regular fee, but that fee is far less than what you might lose doing things on your own. 

Need More Investing Tips?

So, how much do you need to invest in real estate? You can expect to need around 20 percent of the value of the property you're interested in. Depending on your credit and the circumstances of your loan, you might be able to invest for even less.

There's a lot to learn, but we're here to help. 

Contact us for more ideas on real estate investing in Texas, property management services, pricing, and a whole lot more.