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, you must be aware of this kind of valuable information, to help you 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. There are several things you need to consider before buying a property investment.
It is essential to be prepared to put down a big down payment because mortgage insurance is not available for real estate investment properties, and a twenty percent down payment is required in order 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. 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. 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. 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 just new in real estate investing, beware of the risks related to buying real estate properties with very poor condition, requiring large-scale improvements, unless if you know someone who can provide quality work at bargain prices, otherwise you may just end up spending too much on unworthy costly repairs. The the best option for you is to look for real estate properties requiring modest repairs that 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.