Owning real estate is one of the best investments you can make. In fact, homeowners tend to grow wealth faster than renters, according to Harvard University’s Joint Center for Housing Studies. After buying a primary residence, clients tend to want to start investing in rental properties as part of their long-term retirement strategy. Here five points you should keep in mind when considering investment properties:
Invest for cash flow only. Make sure you only purchase a property that’s cash flow positive.
Buy “average” properties. If the average home in your market is a three-bedroom, two-bathroom home with a two-car garage, this is the type of home you should buy.
Know your total expected return. In addition to cash flow, rental properties pay the landlord in three other ways: principal reduction as you make your monthly payment; appreciation as the market pushes the price up; and the tax savings from depreciation.
Understand rehab and carrying costs. If upgrading the property is part of your strategy, you must fully understand the costs involved in rehabbing and carrying the property until it can be rented.
Prepare financially. Start saving some cash for the down payment and meet with a lender to discuss qualifying for financing.
If you’re considering a move or would like to discuss potential investment properties, please give me a call at 301-320-8340 or 703-963-0142. You can also send an email to email@example.com.