What are the key considerations when investing in real estate for beginners?

Investing in real estate requires several considerations, especially for beginners aiming to ensure success and mitigate risk.

Initially, beginner investors should focus on cash on cash return to evaluate the profitability of potential properties. A minimum return of 7% is recommended as a standard benchmark.

• The financial viability of investment properties should be calculated carefully; for example, with a $100,000 property, the expected rental income, after expenses, should yield around $7,000 annually.
• Choosing the type of property is essential; those new to real estate may find single-family homes or multifamily units less risky and easier to manage.
• Involving a reliable property management service can help alleviate the burden of day-to-day property issues, allowing investors to focus on strategic growth.

By adhering to these foundational strategies, novice investors can build a solid foundation within the real estate market, avoiding common pitfalls.