What is Real Estate Investing?
A tangible, cash-generating asset and appreciates in value. Real estate investment has proven to be a powerful method of accumulating wealth over time and investors are getting a return on their investment in three ways, cash flow, return on taxes and appreciation.
What are the benefits?
The main benefit is the profit that you can make if you handle your investment correctly. Rental property provides a source of income, but other than that, investment properties qualify for numerous tax deductions which may include cost of building maintenance and repairs and interest paid on loans related to the property.
Are you looking to Rent or Flip?
If you choose to hold and rent it, take into consideration the responsibility it takes to be a landlord. You will need a lease agreement specifying what you will be responsible for maintaining, fixing, etc. and the rent, date of payment and length from the tenant. It can turn into a very profitable venture if you make sure you are well versed in property management. While you can self-manage, it may be wise to outsource this to a local experienced property management company.
If you choose to flip you must take into account any and all property updates and repairs that need to be made. Flipping a home can be considered less of a responsibility than becoming a landlord, but keep in mind that someone will be living in the home you are flipping and you want to make sure they will find it worth their money to purchase. Keep in mind that flipping may not be the wise choice in a down housing market.
How are your Finances?
The better your credit, the more likely you will be able to get a decent loan. It is also important to have a cash reserve left over to put towards unexpected vacancies, maintenance and repairs. Typically lenders require 20% down on an investor loan.
Location, Location, Location – make sure it is in an area where you can attract tenants. Selling a home in a great location usually means a shorter hold time and likely a greater return.
Timeline and budget. Having a reasonable, realistic timeline and budget for repairs will prepare you for success and stick to the guidelines you set.
Do not Over Improve! This is not your personal residence. Only make improvements that will either make it more attractive to sell/rent.
As a seasoned Investor myself, please feel free to contact me to help you decide if you want to become a Real Estate Investor.