Investment properties are very hot right now. There always seems to be customers who are looking at adding additional income by renting, flipping or developing real estate. Depending on your level of expertise, this can be a great option if you are willing to put forth the effort. Here are some things to remember when getting into this type of business:
• Location, location, location. It seems simple enough, but good real estate tends to stay that way. Quality neighborhoods, rental districts and undervalued areas are great places to look for investment grade property.
• You make most of your money when you buy the property, not sell it. This means buying at a discounted price or where there is an opportunity allows you the ability to ride the property value up. Just because you buy a property does not mean it will appreciate. Do your homework and purchase undervalued assets.
• Assess what your ability for repair is. Can you fix anything? If so, then flipping houses may be for you. If you are challenged in this area then you need to take into account these extra expenses. Perhaps low maintenance rentals are your speed. Be realistic. Invest to your personal strengths.
• Plan your financing, corporation documents and tax returns with professionals who understand this type of venture. An ounce of prevention in worth a pound of cure.
When operating in this environment, you must rely on patience and trust the research that you have done. This is a get rich slow plan that favors an investor who is willing to pick and choose just the right investment property. By following a few simple rules, you can ensure a process that greatly limits your risk exposer. As always, Legacy Bank looks to help our customers by offering expertise and analysis when navigating these waters.
Information provided by Jeff Sullivan, Mortgage Banker, Legacy Bank, 515-967-4949.