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Reducing Risks in Real Estate Investing

Reducing Risks in Real Estate Investing

small wooden house on top of calculator

Real estate investing can be risky. However, there are steps you can take to lower that risk and increase your monthly cash flow. There are always things that can go wrong when you buy single-family homes as investment properties. Our tips can help you to reduce your risk and make sure that your rental houses are more than profitable.

Look For Financing with Low-Interest Rates

A low-interest rate means a lower mortgage payment, which can increase your cash flow and decrease your risk. By getting favorable financing, you will be increasing your monthly cash flow. Search for lenders who can offer you creative financing options. This can usually give you lower interest rates, increasing your cash flow. If you find a lender who is able to give you lower interest rates, it might be worth it to see if you can also refinance your current loans at that lower rate.

Look for a Fixer-Upper (Within Reason)

white painted kitchen with marble countertops and tile floors

A fixer-upper will help you to make more money in the long run. By finding a house that you can make improvements to, you will increase your equity in the house. You do need to make sure that the improvements won’t be more than the house is worth though. There are instances where investors buy properties that end up being huge projects, and their cash flow suffers because of it. By making reasonable and financially smart improvements, you increase the value of the house and can charge higher rent.

Higher Down Payment

If you are able to make a higher down payment, it can increase your cash flow and reduce some of your risks. A lot of mortgage providers offer low or no down payment options to try to attract newer or first-time investors. However, this can easily get you in trouble with your cash flow. The more cash you put down upfront, the lower your monthly payment will be, thus increasing how much money you make off of the house each month.

Buy Value

house with a porch

One of the best ways to decrease your risk is to buy value. This means to buy a house that is listed below market value or is underpriced. This also includes finding lower-priced houses that just need a little work in order to be able to charge higher rent for them. If you keep an eye on up-and-coming areas, you can buy houses at a lower price before the prices start to go up. Buying value will help your cash flow to be stable for years to come.

Buy in Up-and-Coming Neighborhoods

If you can buy a house in the next “it” neighborhood before it becomes popular, you can usually have a high cash flow with the property. If you buy into a neighborhood at the front end of the rehabilitation, you can usually get a house at a lower cost that will end up being worth way more than what you purchased it for. The houses in the area will likely be older, so you can usually buy at a lower price and make improvements to raise the value.

How Memphis Cashflow Can Help

Whether you are an experienced real estate investor or this is your first time, Memphis Cashflow can help you through the entire process. From finding the perfect investment properties to performing improvements and finding renters, we will be there for you every step of the way. We have years of experience in the Memphis real estate market. We know the best places to invest in and how to increase your monthly cash flow through investing in the right properties. Contact us today to get started.

Posted by Katie Eldridge at 2:13 PM