Real Estate has always been a tried and true investment whether it be a personal residence, rental property, or commercial space. With so many options which route should you take?
It’s easiest to purchase in the market where you live in order to keep tabs on your property and avoid costly fees from management companies. If you live in the greater Puget Sound region these investments are not exactly “good deals” due to the high cost of living.
Whether you want to invest locally or somewhere else, here are my top 4 things to ask yourself when considering an investment property:
- How will the property be used? A full time tenant is more stable and limits down time, but also typically yields the lowest return for the safe factor. A vacation rental, as in Airbnb, can produce the most income, yet you need to deal with the constant turnover.
- Where should you purchase? Do you want to stay close to home or take a gamble in an up and coming area nearby? Perhaps even an affordable area in a place you like to visit such as Arizona. In this case you utilize the vacation rental option and book time for yourself as well. There are companies who manage vacation rentals for a fee if you prefer.
- How much do you want to spend? Obviously your budget is important. If you currently own a home you will now need to qualify for a second mortgage. The rates are higher and so is the required down payment. Ask a lender about the difference between a second home, investment property, and rental.
- What is the future use of the property? For some, the home is an investment that will be cashed out years down the road to help with retirement. For others it’s a home they plan to move to down the line and want to get in at today’s prices. In addition, other investors buy stepping stone properties in order to leverage future purchases for more units.
If you are considering an investment property let’s chat. I have helped many buyers determine if investing is right for them and can connect you to local lenders and brokers throughout the country if you chose to look elsewhere.