Investing in property has long been a lucrative investment. Property values almost always increase overtime, especially in the long run, making real estate one of the safest long term investments you can make. But, like with any investment, it carries risk as well, and with real estate, there can be a lot at stake. Here are a few ways to keep investing in property as safe as possible for you and your portfolio.
How to Keep Investing in Property Safe: Reduce Leverage
When purchasing property, you want to try to take ownership of the entire home asset while putting down as little money as possible. But there is such a thing as putting down too little money. The less money you put down, the larger your loan will be, the higher your payments will be, and the longer it will take to pay down your debts.
You should try to put down a twenty percent down payment on the property you purchase. Putting down twenty percent gives you enough leverage to make your money work for you without putting yourself into too much risk. You could even go as high as twenty five or thirty percent to lower your risk further.
Keep it Separate
Separate your business affairs from your personal affairs. Operating your business as a sole proprietor or individual leaves you at a great personal liability in the event of bankruptcy or litigation. You should set up a business entity to operate and own your property so that your personal assets stay safe. An LLC Is often the best choice if a business owns real estate.
An LLC, or limited liability company, limits your personal liability in the event of an emergency. LLCs are easy to set up, and easy to manage, and are a cost effective way to insure your assets.
How to Keep Investing in Property Safe: Do Your Research
If a deal seems too good to be true, it probably is. Try to gather as much information as you possibly can about any property you are going to buy. This will help you know what kind of improvements the property is going to need, any damage or repairs needed, and to see if your property prospect is really worth your investment.
Owning property is almost always a smart move if you are looking to diversify your portfolio. But don’t dive in without knowing what you’re doing. Property can be a highly risky investment if you don’t know how to operate effectively. By following this advice, you will be able to keep your property investment safe.
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Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.