When you’re buying a home as an investment you can follow some of the same steps as you would when you’re buying a home to live in. You should consider the home’s location and whether you can afford the purchase. It’s especially important to have enough money saved for a rainy day.
I’m Ilyce Glink and welcome back to Expert Real Estate Tips dot Net.
During the housing boom of the late 1990s and early 2000s, a lot of people started to buy homes as investments. As interest rates bottomed out, many people approached me with questions about what steps they needed to take to find the best properties and close on them quickly.
Although the housing markets aren’t quite as strong as they once were, it could still be a good time to buy investment property. If you’re thinking about it, they’re six things you’ll want to keep in mind as you’re looking for the right property
First, it’s still all about location. You should be careful about buying property near train tracks or hazardous sites. And you should think about how close the property is to a good school district, and public transportation systems.
Second, you should also think about how far away you are from a property and how tough it’s going to be to manage that property from your location.
Third, make sure the numbers work before you sign the contract. You have to have enough money to cover expenses, especially if you’re unable to find a tenant right away.
You should plan for some vacancy time each year when you’re calculating your numbers. You don’t want to wind up with a huge financial problem because you thought the property would be rented out full time.
Here’s the fourth point: stuff happens. So, be sure to give yourself enough of a financial cushion. That way, if your property winds up sitting vacant or if you have a problem with a tenant not paying the rent, you won’t be headed for bankruptcy court.
You’ll also want to create an exit strategy for yourself and the property. What will trigger the sale of the investment property? Set a goal for yourself – maybe it’s when prices in the neighborhood reach a certain milestone – or an event, like your retirement. Then, you have to plan what you’ll do with the proceeds. If you’re going to buy something else, pay attention to the 1031 tax free exchange rules.
Finally, think about how difficult it’s going to be to sell this investment before you buy it. If the property has been on the market for a while, you may have trouble selling it down the line.
The younger you are when you buy your first piece of real estate, the wealthier you’ll be in your life.
I’m Ilyce Glink. For more information on buying and selling a home, visit my Web site, Expert Real Estate Tips dot net.