With today’s market conditions, both in real estate and in stocks, there are a lot of people deciding to invest in real estate. I personally think investing in real estate is a wise strategy. However, just like any other investment, you need to make sure the numbers line up with your goals before you decide to pull the trigger. Here are a few things to consider.
The first is the current rental rates. You need to know whether they support the purchase price of the home and will lead to long-term equity by holding the property as an investment for at least five to 10 years.
In addition to the mortgage costs, you also want to factor in costs such as HOA dues, home insurance, and a 10% to 15% buffer for maintenance costs. If you can cover all these expenses and then some, we are now talking about a property with cash flow. Those are the best kind of properties.
<div class="pullquote">“Properties with cash flow are the best.”</div>
The second thing to consider is the rental status of the home. Does it already have a tenant in place? If so, when is their lease up and do you want this particular tenant to renew their lease? These decisions and more need to be made in advance.
The third thing is the condition of the property. You don’t want to buy something that you have to dump a bunch of money into right away, unless you have already factored that into your costs.
If you have any questions about investment properties or about real estate in general, don’t hesitate to give me a call or send me an email. I would love to hear from you.