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.
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. As a real estate investor, you need to have enough savings needed for handling unexpected repairs, and there are also challenges opting for landlord services as well before the rent checks start coming 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. Unless indicated in the contract that your tenant will be responsible for these expenses, it is your responsibility to pay the utility bills, mortgage, insurance and property taxes, and it is important to set aside a portion of your profit for these important matters. Bear in mind that property taxes highly depends on the property type and how long it has been kept, so it’s crucial to consider property taxes when investing in a real estate property, because if the previous homestead exemption that has been applied, you may discover a big increase in property taxes. 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. 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’re comfortable doing business, with a clear agreement in managing your investment.