Written by Laura Wise. The housing market is rebounding and interest rates are still low, meaning an investment property might make a lot of sense for you. Before you move forward with purchasing an investment property, take note of these considerations.
Are you investing for the rental income or speculating on the rate of inflation. Always analyze the cap rates, or income vs expense, or a quick reference is income divided by the value, if it is not at least 7% (much better than any saving institution pays on a savings account) keep looking.
I can help …..
I own rentals. I manage rental properties for my clients out of town. I will find you one that makes sense.
Not my first choice in investment, they are not usually thought of as an investment, re-sale can be difficult, you can lose money if you are buying with resale inflation in mind. However, they are a great money saver for those yearly vacations. Especially if you buy second hand, similar to a foreclosure.
Real Estate Development
Development deals come with a high price tag and a lot of risk. While the return can also be high, for the average investor, the risk doesn’t outweigh the potential reward.
Foreign Real Estate
Before buying property in another country, make sure you are aware of the differences in their real estate laws and protections. Also take into consideration the country’s economic and political stability.
If you purchase an investment property, the mortgage will not be your only expense. Remember necessary insurance, differences in tax treatment of investment property vs. primary residence, upkeep and — if you plan to visit your property — travel costs. So talk to your accountant.
Once you’ve thought through the considerations above, an investment property may still be a good financial move for you. Interest rates are low, and while home prices are rising, they are still relatively low, call me I will help you find, and analyze the return.
I look forward to talking with you.