Investing in real estate has often been considered a long-term and conservative income venture. With today's ever-changing market, investors and home buyers alike have the opportunity to take advantage of historically low interest rates -- which will reduce their overall costs.
For rental properties, this can be the difference between profits sooner over later. If you are lucky enough to be fairly seasoned in real estate investments, now is your time. If you are a novice, you may want to consider some basic principles before jumping in with both legs.
Educate yourself. Remember that real estate is not a liquid investment. It cannot be turned into cash at a moment's notice. If you are buying it well, you cannot also expect to sell it well in the same type of market. You may have to hold on to it and wait until the market trends to your advantage.
Be ready for a potential short-term loss. Make sure you have available capital to cover any expenses and shortfalls while cultivating tenants.
Don't overdo it your first time around! Invest in a condominium or small house. Refrain from taking on an entire apartment complex as your first venture.
This may sound obvious, but choose a property that will continue to be in demand. Shoot for a moderately priced property with at least three bedrooms, two full baths and a garage. A top location never hurts and goes a long way when reselling.
You would always research a location's amenities before you purchased it to live in, and you when buying as an investment, too. Check the school district and any vacant lots or knockdowns on the street. Know what the neighborhood will look like over the next few years. Be sure your Realtor can educate you on the resale rate in the area.
Get your investment professionally inspected before you purchase it. How much life is left on the roof? Open and close every window and door and even check every electrical outlet. Look for signs of water damage and have a certified pest inspector check for wood-destroying insects. Even with the most thorough inspection, things happen. Insure that additional capital is set aside for unexpected repairs.
Review the overall upkeep of the entire neighborhood. It will affect your ability to rent and eventually resell. How well maintained are the lawns and homes in the area? Are there any eyesores?
Speak to your tax advisor and be well versed on the laws of renting along with any planning necessary to protect your investment.
There is a difference when purchasing a home to rent rather than live in. It has to be a good business decision. Emotion should not cloud your judgment. The bottom line needs to be considered and there must be a good return on investment.
Linda Skolnick's "Skolnick's Scoop" appears every other Friday. She is a Realtor with Coldwell Banker Riverside in Westport and can be reached through her website, www.GoAskLinda.com, or by calling 203-246-0088.