There are so many steals out there right now. How do you take advantage of them? First, have specific goals in mind. Do you want to fix and flip, or purchase a property to rent out? How much do you have to spend? How much do you want to make? How much time, energy, and expertise do you have for property renovation?
Choose Your Investment by Identifying Your Desired Outcome
Rental rates are high right now, while purchase prices are low, so purchasing a rental property can be a great investment! We can analyze areas of town that interest you, calculating average rental prices compared to your monthly mortgage cost for those homes currently for sale. It’s up to you to estimate repair costs that may be necessary to get the property into good rental condition. Net income potential depends upon repair and upkeep costs as well as purchase price. Remember, investors are required to put 20% down. A higher downpayment will reduce your mortgage interest rate and your monthly payments. Make sure you have the finances to withstand vacancies and upkeep costs. Consider the value of single family homes versus duplexes and fourplexes. We can analyze for you how long the different types of rental properties are currently taking to rent out. At this time, vacancy times are very short for properties in good condition.
Planning for Costs: DIY vs Professional Contractors
Similarly, if you’re interested in a fix and flip, we can help you analyze properties that interest you. We estimate potential resale value based on the price of recently sold similar properties in the area, and we compare that to the asking price of properties for sale that interest you. We’re looking for a large enough spread between initial cost and potential sale price to make room for repair costs and profit. Again, it is up to the investor to analyze the property and estimate the costs of repairs and upgrades to get the property into great condition that will attract the most motivated, qualified buyers. We can look at what size properties are most popular and how long they usually take to sell. For help getting started with your project budget, take a look at this great overview of the return on investments for various home upgrades.
Where do we find low-priced properties with investment potential? Real estate auctions, foreclosure sales, short sale offers, HUD & VA repos, all have their own pros and cons, but each can offer amazing value to the investor buyer. Let us help you understand the ins and outs of these different types of transactions and evaluate which would be the best type for you! Always make offers contingent on inspection and have a trusted professional inspect the property! Many of these properties are sold “as-is” so you’re buying the property as well as it’s defects. Remember to factor in the cost of all repairs when estimating your potential profits. There is money to be made. The economy is ripe for real estate investment.
Anyone who has experience with investment properties knows that every house, every building is different. And that there will inevitably be unexpected issues that arise. Take a look at one real estate investment “case study”, and the 4 rules of investing it taught us.
You’ve decided on the right investment property and you’ve budgeted any upgrades based on their potential return on investment. Now it’s time to choose the right materials, and the right designs for your project.
We’re happy to help all investor buyers in all price ranges with all types of transactions. If you’re thinking about investing in real estate, contact us!