Now may be an ideal time to invest in real estate. But, when considering an investment property there are many things to keep in mind. Here are just a few:
Know the market. The housing market varies from state-to-state, town-to-town and neighborhood-to-neighborhood. So, to make sure you’re really getting a good deal you should work with a local real estate agent who knows the market.
Identify the good buys. A lot of potential investment properties pop up in today’s market. But more often than not, these properties are distressed and as an investor, you need to be able to identify when you need to say goodbye to a supposed “goodbuy.”
Be ready. Depending on the town, good buys can be snatched up very quickly (sometimes they’re gone before they even hit the market). If you’re serious about investing, be ready to check the house out and make an offer.
PITI and maintenance. As the owner of a property you’re responsible for maintaining the property, and paying the mortgage principle, interest, taxes and insurance. A good investment should cover these basic costs, and turn over a profit.
Consider all costs. When viewing properties, develop comprehensive budgets to track all potential costs (e.g., renovations, closing costs, carrying costs, etc.).
The “me” factor. While some investment properties may be for personal use, others are not, so make objective decisions about what’s necessary for the property/budget, rather than what you may prefer (e.g., Formica vs. granite counter tops).