7 things to know about Buying an Investment Home
This post isn't for everyone, but there definitely should be a significant number of people out there examining the return on their investments in stocks and bonds in current markets. While many shy away from rental home ownership due to a distaste for the "landlord" function, it can be a more passive investment if a property management company is hired. While a percentage of rents is paid for this management function, current market conditions and the old stand-by benefits of rental real estate have created opportunities for investors.
- There is a glut of property in foreclosure, creating opportunities to buy at prices well below market value.
- Interest rates are at historic lows.
- The combination of the two items above give investors the ability to buy and rent property with a positive cash flow, the primary objective.
- However, besides cash flow, appreciation will return, and has already in some areas of the country.
- Unlike stocks, rental property usually benefits from inflation, and many believe that government spending and borrowing will lead to continued inflationary pressures.
- Tax advantages in owning rental property are a definite draw for many investors.
- Paying down the loan can free up cash for future leverage and expansion of property holdings.
While many of the items listed have long been reasons for investing in rental property, the current market and interest rate factors can make it a reality for those who previously shied away. One more bonus is the inevitable fact that people must either buy a home or rent a home to live in. Many previous would be buyers or home owners have short sold or foreclosed on their homes forcing them to enter into the renting pool thus creating a higher demand for quality rental homes. Fast forward this scenario 3-7 years down the road after these renters turn back into buyers now that their short sales or foreclosures have seasoned on their credit reports making them eligible buyers again. Their want and or need to buy again spurs additional purchase activity for the same homes that an investor has rented to them over the last several years. This purchase activity also increases buying demand and begins to raise the prices of homes in the area again. Real Estate Cycles are unavoidable. The key is to being able to identify and ride the profitable cycles.
To find out if you Qualify to
Buy an Investment Home
Casey Moseman @ 702-271-1274