Guest Blog Post by Cara Ameer
With the real estate market coming back and property values on the rise, many people are looking to purchase real estate as an investment again. But in this new market, the rules and dynamics have significantly changed. Here are several points to consider:
Advice for getting in the real estate investment game:
Act and think conservative. Appreciation is typically not happening in huge increases as it has in the past. Expect it to be much more gradual and prices will bounce as there are still some short sale and foreclosure inventory to contend with.
What are your goals – are you looking to generate monthly income through a rental or to quickly turn the property? A turn of the property usually requires money to improve. Keep in mind there can be hitches for a buyer with flipping – lenders scrutinize the acquisition time to contract time –known as “seasoning”. You may end up having to carry the property for a few months longer than expected. Learn the nuances here.
Start out small and with something you can manage and/or have adequate resources to help. Don’t bite off more than you can chew – work with a manageable sum of money you are willing to risk. If you have never renovated a property – probably not a good first project to take on. It’s not as easy as all of the home improvement shows make it look. A condominium or something needing minimal work may be a good first investment. However, do your due diligence – there are always gotcha’s and hidden issues. Working with an experienced agent well versed in the type of properties that you are interested in can be a tremendous benefit. Just like you would seek out a financial advisor’s advice, a good agent can advise you of the risks, upsides and downsides and nuances. Their insight into the market and how to best accomplish your investment goals can be invaluable. You definitely need someone “in the know” here. Buying the wrong piece of real estate can be an expensive mistake to make.
With condominiums, the devil is in the details. Do your due diligence on the community – what is the financial health of the community, number of owners vs. renters, rental policies, any pending assessments or litigation?
Always overestimate the time and cost involved with any investment project. Make sure you are financially able to carry the property in case of the “what if’s”…. there are taxes, insurance, maintenance, association fees, etc.
Becoming a first time landlord can be stressful if you are not prepared – consult with several property managers and learn about using them vs. handling yourself. There are a host of issues to consider.
Investing with others may sound attractive and help leverage cash, but remember it can be …read more
Via: Coldwell Banker Blog