Purchasing Investment Property
August 12, 2008
With the median price of homes dropping and banks and investors offering their foreclosed properties at substantially discounted prices, prospective buyers are looking at the possibility of buying a property for the purpose of holding it for rental income. As a long term investment, real estate has historically proven to be a great wealth builder. However, purchasing a property just because it is substantially discounted does not necessarily make it a good rental income property.
Some issues to consider:
1) Location, location, location - These three words have been the real estate mantra for as long as I can remember.
2) Do your homework. Check out the local newspapers regarding current monthly rental prices.
Will your purchase have a positive cash flow? What is the selling of other properties in the neighborhood? Is the area filled with foreclosures? Does the municipality have a landlord licensing law and/or inspection law? Get prequalified by a lender. Loans are more difficult to obtain in the present credit environment.
3) Interview any acquaintances that own rental property. You need to understand the pros, cons and pitfalls of being a landlord.
4) Go over the financials with your accountant. Know the tax ramifications.
There are many really "good buys" coming onto the market. If you invest now, it is quite possible that 10 years from now, the value of your property will have increased.
With the median price of homes dropping and banks and investors offering their foreclosed properties at substantially discounted prices, prospective buyers are looking at the possibility of buying a property for the purpose of holding it for rental income. As a long term investment, real estate has historically proven to be a great wealth builder. However, purchasing a property just because it is substantially discounted does not necessarily make it a good rental income property.
Some issues to consider:
1) Location, location, location - These three words have been the real estate mantra for as long as I can remember.
2) Do your homework. Check out the local newspapers regarding current monthly rental prices.
Will your purchase have a positive cash flow? What is the selling of other properties in the neighborhood? Is the area filled with foreclosures? Does the municipality have a landlord licensing law and/or inspection law? Get prequalified by a lender. Loans are more difficult to obtain in the present credit environment.
3) Interview any acquaintances that own rental property. You need to understand the pros, cons and pitfalls of being a landlord.
4) Go over the financials with your accountant. Know the tax ramifications.
There are many really "good buys" coming onto the market. If you invest now, it is quite possible that 10 years from now, the value of your property will have increased.
posted by shirley harry at 8:17 AM
1 Comments:
Learning about real estate investing is one of the best real estate tactics that you can benefit from in this particular industry. When you decide to get into real estate, it is absolutely vital that you take the time to understand the laws that surround this industry, as well as the benefits that you can experience as a result of being involved in the market that focuses on buying and selling various types of properties.
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