Stuart Drossner Real Estate Investment 101: Important Things to Consider When Buying Investment Property
As you have probably noticed, the housing market in the United States has been hindered by too few houses being chased by too many buyers, thus the choices for potential buyers are limited, and it also increase the prices, resulting in bidding battles in hotter markets. As a real estate investor, this fact is valuable so you can make smart decisions when it comes to buying an investment property. Houses that need upgrading or significant repairs located in hot locations may be wise investments. It doesn’t matter regardless you want to buy a house to sell it in the future for higher profits, or a multi-unit complex for rentals, these are valid and acceptable reasons why you shouldn’t be hesitant to invest in a real estate property. It is also important to be aware of the most important things you have to consider when investing in a real estate property.
Mortgage insurance is not available for real estate investment properties, so you must be prepared for a huge down payment, and it is usually twenty percent to get traditional financing. As a real estate investor, you have to prepare enough money to handle unexpected repairs, including the challenges of opting to landlord services before the rent checks begin rolling in. You have to remember that income varies in a real estate property because tenants comes and go, and it may take some time renting out a vacated unit, most especially if it requires rehabilitation or repairs. You have a responsibility to pay utility bills, mortgage, insurance and property taxes, unless otherwise indicated in the lease contract, previous you must set aside a portion of your profit for these important matters. The amount of property taxes depends on the type of property and how long it has been kept, so it’s important to consider property taxes when investing in a real estate property, because you may discover a huge increase in property taxes if previously, a homestead exemption has been applied. There are risks associated with real estate properties requiring large-scale improvements, unless if you know a company or someone who can provide quality work at bargain prices, otherwise you may end up spending too much on costly repairs. You have to look for properties that only need modest repairs which are priced at below-market rates.
For first-timers in the field of real estate, experts highly recommend starting small, such as buying a single apartment, duplex or condo, to help you learn the process of investing in real estate, and then decide if you are willing to handle a larger scale. You may consider enlisting co-investors if you cannot afford to buy a property on your own, but you have to make sure you’re comfortable doing business, with a clear agreement in managing your investment.