Ever considered purchasing a home for rental property to diversify your portfolio? What about that house down the street that needs "a little TLC" and making the needed repairs only to resell the home for a decent profit?
I have multiple years of experiencing assisting investor clients in making those financial goals a reality. The most important thing to an investor is finding a market expert that they TRUST. I will never encourage you to buy a property I wouldn't consider purchasing myself.
It's not about the quick sale for me - it's about building a long-term working relationship which is profitable for each of us. I see so many investors working with regular residential agents and the recommendations those agents make. I wait for the disaster...the agents didn't know the market, didn't understand the expenses involved with repairs, and didn't take into consideration the expense of holding the property while we get it sold again. I have also seen agents who are not versed in cash flow analyses trying to help investors purchase rental properties that are not going to cash flow in this lifetime. Don't be one of the "I wish I had an Agent who would have helped me rather than just sell me a property." I have the knowledge, experience, and connections to make you money.
Sure, those foreclosures and higher inventory of listed homes are tempting to check out right now. If you’re after a home to live in, you won’t go wrong starting your hunt now because you could find the home of your dreams anytime. There are many other factors beyond the cost when you’re buying a primary residence. But an investment property is a different animal to evaluate.
Know when to buy.
I’ve been advised before that just as long as you’re a long term investor, you shouldn’t mind how the market’s doing when you buy in. I’d argue that this is true about stock market investing — I’m not quite convinced that investing at the peak of the housing bubble is a good idea no matter how you look at it. Doing so can test your commitment to the investing process when you realize your investment is pretty much dead money for a significant period of time. Once you buy a property, your profit is locked in: you’ve made or lost your money at the time of purchase.
Know where to buy.
Another decision that could make or break your bank rides on what location or neighborhood you’ve decided to buy into. Here’s where your research should pay off — carefully consider places of good employment, development and decent growth. Where’s the demand for properties? Also, consider the issue of states that have homestead exemptions, where investment properties are known not to appreciate as quickly as in other areas.
Who should manage the property?
Are you going to be the landlord or is someone else doing it? That could spell additional expenses if you pay someone else to manage your tenants and rentals. But if you’re buying outside of your own neighborhood, you may find that hiring a property manager is the only choice you have.
Have a plan.
Investing this way is a big commitment and if I enter into this, I’d work to understand all the risks involved and perform a significant amount of due diligence before making a transaction. Especially since I’ve never done this before, I’d be doing a lot of research, readings, probably even attend seminars and evaluate all options before moving forward. Unfortunately, planning has not been the strong point for a lot of would-be investors, given how enticing the hot market of recent years turned out to be.
Don’t get emotional nor attached.
As a househunter looking for a home to live in, it’s but natural to feel emotionally attached to a house that calls your name. But as an investor, you’ll need to check your feelings out of the process. You may not be optimizing your investment if your emotions get in the way.
Know the basics and the math.
How much do you like math? Investing in real estate the traditional way involves transactions, money, number crunching. The only way to know if you’re going to be making money is to be familiar with a variety of calculations on the subject. Without this knowledge, you’re just flying blind.
Invest for the right reasons.
Are you cut out to be a landlord, a rehabber, a flipper? Think about what kind of role you’d like to take when entering into this realm of investing — will you be actively involved in property management or just be a passive investor? Also, you may convince yourself that this is something to get into because “everyone else is doing it” (herd mentality). Or because you’re looking for a tax shelter (max your retirement funds, it’s easier). Or because you want to feel the joy and power of “owning something”. Some of these feelings do fade away with time but your money commitment will remain, so be prepared to ride the waves of this market.
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