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. This kind of information is valuable to every real estate investor because it greatly affects your decision making when it comes to buying an investment property. Houses that need upgrading or significant repairs located in hot 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.
First and foremost mortgage insurance is not available for real estate investment properties, so you must carefully plan and prepare to bring out a huge down payment, which is usually twenty percent to get traditional financing. Before the rent checks start coming, you have to also prepare to spend on unexpected repairs, especially if you’re opting for landlord services. Choosing the right location of your rental property is crucial to ensure that tenants come and go once a unit is vacated, and profit varies most especially if a unit can be occupied just yet because it needs major repairs or renovation. 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. Property taxes must also be considered, because you may discover a huge increase in property taxes if previously, a homestead exemption has been applied. If you are a newbie in real estate investments, beware of the risks of investing in real estate properties that require large-scale improvements, unless if you know a company who can provide quality work at bargain prices, because otherwise, you’ll 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.
Starting small, especially if you are new in the business is what real estate experts recommend, such as buying a single apartment, duplex or condo, to help you stay grounded in 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 are not just comfortable doing business with your partners, but also have a clear agreement in managing your investment.