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. Properties needing significant repair and renovation but are located in hot locations are wise investment. Whether you are considering buying a multi-unit complex for rentals or a house so you can sell it in the future after renovating it are all acceptable and valid reasons to engage in real estate investment. There are important things you must consider before purchasing a real estate 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 have to prepare enough money to handle unexpected repairs, including the challenges of opting to landlord services before the rent checks begin rolling in. You have to remember that income varies in a real estate property because tenants comes and go, and it may take some time renting out a vacated unit, most especially if it requires rehabilitation or repairs. 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. 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. The the best option for you is to look for real estate properties requiring modest repairs that are priced at below-market rates.
It is best to start small most especially if it’s your first time investing in real estate, so you can start buying a single apartment, duplex or condo, to help you learn the process of investing in real estate, and then decide if you are willing to handle a larger scale if you are able to handle small ones smoothly. 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.