Have a little extra money to invest? The real estate market is one of the traditional avenues for investing that has proven to be a nice alternative to the risk of the stock market. But is real estate still a good investment? Here’s what you need to know to make real estate a sound investment.

Plan Out Expenses

When you purchase real estate, make sure that you are fully aware of the costs involved. That not only includes the cost of the property, but things such as upkeep, repairs, utilities, and taxes. If you don’t want to handle a rental alone, you can go through a rental company but that is an additional cost.

Plan out all of your expenses beforehand. Know what the entire process will cost you before getting started. There is nothing worse than starting an investment and realizing it will cost you far more than you imagined.

Pay with Cash if You Can

Most financial experts warn against borrowing money to go toward an investment. If you have saved a substantial amount of cash, consider purchasing a real estate investment with that. This way, you can afford the mortgage payments even if you don’t have rental income.

Given the turnover rate of renters, there are major potential downsides to borrowing for an investment property. Pay with cash to give yourself flexibility.

Do Your Homework

Whenever you consider purchasing an investment property, make sure that you do your homework on said property first. If it is land that you plan to sell down the line, look over the land deed carefully and thoroughly.

There are many things that can impact the value of property, even if it is just a swath of land. Knowing the details beforehand can keep you from any unexpected surprises. Also, check out comparables in the neighborhood.  It will give you a stronger idea of what the property in question is worth and whether or not the area is an up-and-coming one. Do your homework.