Stuart Drossner Real Estate Investment 101: Important Things to Consider When Buying Investment Property
The housing market has subsequently hampered by too few properties, and there are many buyers with limited choices, increased prices, that results in bidding battles in hotter markets. As a real estate investor, you must be aware of this kind of valuable information, to help you make smart decisions when it comes to buying an investment property. Homes needing significant upgrading and significant repairs but are located in or locations may be wise investments. Whether you want to purchase a house to renovate it and sell it at a higher price or buy a multiunit complex for rentals, these are valid and acceptable reasons why you should be motivated to invest in a real estate property. There are several things you need to consider before buying a property investment.
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. Unless agreed to be paid by the tenant, it is your responsibility to pay the bills, mortgage, insurance, and property taxes, so you have to 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.
It is best to start small most especially if it’s your first time investing in real estate, so you can start 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 if you are able to handle small ones smoothly. 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.