We’ve all heard that today’s low interest rates and affordable housing prices make this an ideal time to buy investment property. But if you’re new to the world of real estate investing, the idea of parting with your hard-earned savings for a rental house can be downright terrifying. What kind of house is best to buy? How do investment loans work? What about maintenance and repairs? Finding renters? The uncertainty generated by these questions and countless others might feel overwhelming. Don’t let it.
Instead, join us for a seminar on real estate investing January 16. In it, we will walk you through the steps of buying a rental house. We will also point you to resources that will help along the way. Financial advisors help invest in the stock market; as real estate experts, we’re here to help you invest in the housing market.
In this month’s newsletter, we address one of the topics of the seminar and often the first question potential investors have: what should I look for in an investment property?
Location, Location, Location
The old adage of location, location, location applies to rental houses as much as it does to family homes. When, years down the road, you decide to sell your investment property, you’ll have an easier time if you follow a few guidelines of where NOT to buy, including:
Small vs. Large Repairs
Another familiar guideline also holds true: expect to deal with some small repairs, but make sure the major items--roof, HVAC, foundation, appliances--are in good condition. Unless you can buy the property at a price that will allow you to make those big-ticket repairs and still have a solid return on investment, avoid houses where bigger, costlier projects are needed.
The Upside of Outdated Decor
What about houses that have been well-maintained but whose decor lags behind a decade or two? If you were buying a house to live in, no doubt you’d factor in the cost of updating wall colors, fixtures and appliances. That’s not necessary when buying a rental house. In fact, most renters are willing to live with flocked velvet wallpaper in the kitchen if the refrigerator is clean and functions properly. Save your rehab money until it’s time to sell the property.
Distressed for Less
Sometimes it’s a smart move to trade off great condition for great value. One alternative to buying a house in solid condition is buying one that is distressed but fixable. In our seminar, we’ll talk about special loans available to investors that include the cost of rehabbing. We’ll also discuss cash flow as it relates to the mortgage of your investment property, and why it’s better to choose a more expensive house that will appreciate in value rather than one with lower payments in an area where homes do not appreciate.
We will cover this and much more in January’s seminar. Call today to reserve your spot. The event is free, but seating is limited.
If you are ready to start your buying or selling process
give us a call. We're happy to answer all your questions.