How To Make Sure Your Money Is Safe In Real Estate
Every investment has an element of risk and real estate is no exception. However, it is in your interest to keep your risks low and your returns high. Here are a few risks related to real estate investments and how to mitigate them.
The Right Tenants
Recession or no recession, students will need accommodation. Targeting them will ensure a steady income all through the recession. You can buy a home and rent out individual units -- this will assure you of more income than if you rented the home as one unit.
If you are investing in traditional rentals, you also have to ensure you get the right kind of tenant. The wrong kind of tenant will not pay rent on time and may damage your house.
Set your own unwritten rules about the kind of tenants you'd want to have and stick to them. Be careful not to discriminate on the basis of gender, race, religion, etc.
Vacation Homes
Tourism does suffer the effects of recession but not as much as other sectors. It has been known to weather the storms before, so investing in vacation rentals is another sure way of securing your investment from recession.
Spread Your Risk
Instead of concentrating all your investment in one property, it may be a better idea to spread the risk. You could create an investment pool with partners and buy shares in diverse types of property in different locations.
For example, instead of owning 100% shares of one property in North Carolina, you can own 20% of the same property, another 30% of vacation rentals in Miami, and maybe 10% of another in a different location.
Insurance
It is smart to insure your property against catastrophes such as floods and fires. Over and above that, you may need liability insurance in case someone gets injured on your property. You should also consider landlord's insurance if you're investing in rentals.
Titling
The names you put on your property title may expose or protect your property. If you own the property as a couple, it cannot be sold on the basis of one party's failure.
The second option is to register the property under a limited liability company. This limits your individual liability.
Thirdly, you can register the title under a land trust. Here, both your property and your name are protected.
Real estate is a fairly secure investment compared to other investments such as stocks. However, you need to take further steps to secure your investment. Such protective measures include choosing the right location, finding the right tenants, diversifying, spreading your risk, and getting insurance. You can contact companies like Bankers Real Estate for more information.
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