In the history of the world, perhaps nothing has killed more real ambitions than the thought that one does not have enough money to get started. While this might not be true as you can actually make income and at the same time hold a property of your won. Questions like how much money should must hold before getting yours hands dirty with this sector, what is going to be the EMI I need to pay monthly and so on are the most common ones when you start thinking about buying a home. Now its time for the reality check lets break down what ideally one should hold in their hand and also how to reduce the amount when possible.
Well ideally a smart investor with sound financial literacy could possibly start with a little or no capital too. But that doesn’t mean you are getting it for free someone’s money has to be invested. Therefore, with due diligence you could ask for your bank to mortgage on the property you are interested in and paydown the down payment. And you rent out the property and use the rental income to pay your mortgage and the seller over time. But as a beginner it is advised to have some capital with you in case of any emergency. Ideally it has been said that one should hold at least 20% of the mortgage amount in your hand.
The tried and true way of investing in real estate is the most expensive and time consuming i.e. becoming a landlord. While we all are familiar with the basic idea of buying the residential or commercial property and putting it on rent (looking out for tenants) and the owner is responsible for paying all the taxes and maintenance cost actually, then the rent will cover your cost and the remaining amount will be your income and maybe over a period of time it also provide capital gains too. But with this there is a risk of not getting rental income greater than or equal to property monthly expenditure and you could end up loosing money. Therefore, you need due diligence before you buy a property. Having said that there are few tips you could probably do while you are looking to buy a property.
So, here the part you have been waiting for… How much money will I really need to buy a property? In a nutshell here’s what all you need
Also, do remember your ultimate aim for buying/investing in real estate is to get capital gains and high yield. So, start looking for it and be a smart investor.