{"id":19280,"date":"2021-07-27T08:35:00","date_gmt":"2021-07-27T12:35:00","guid":{"rendered":"https:\/\/www.beverly-hanks.com\/blog\/?p=19280"},"modified":"2021-07-27T08:35:00","modified_gmt":"2021-07-27T12:35:00","slug":"investment-considerations","status":"publish","type":"post","link":"https:\/\/www.naibeverly-hanks.com\/blog\/investment-considerations\/","title":{"rendered":"Top Things to Consider When Buying an Investment Property"},"content":{"rendered":"\n
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Guest Post by Paul Ryan <\/p>\n\n\n

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A penny saved is a penny earned, but a penny invested can turn into dollars down the road. Buying an investment property<\/a> can be a solid way to make money and diversify your portfolio. It also comes with some costly downsides. Here are some factors to consider before you decide to take the investment property leap.<\/p>\n\n\n

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Risk vs. Reward<\/h2>\n\n\n

Making a profit in real estate isn\u2019t for the faint of heart. It can be a great source of passive income, and real estate has had a stable rate of return over the years. There are also tax deductions from mortgage interest, property taxes, and some expenses. On the flip side, you could face expensive repairs, vacancies, bad tenants<\/a>, a downturn in the rental housing market, and property tax hikes. Like any investment, determine your risk tolerance before sinking money into a property. <\/p>\n\n\n

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Calculate the Costs<\/h2>\n\n\n

Along with the down payment and mortgage, you\u2019ll pay taxes, homeowners insurance, possible HOA fees<\/a>, and maintenance. A good rule to follow for rental properties is the 1% rule<\/a>. Simply put, a home that costs $100,000 needs to bring in $1,000 a month. If the property you\u2019re considering won\u2019t meet this rule, you might want to skip it. Exceptions can be made in up-and-coming locales where home and rent prices may make a significant jump.\u00a0<\/p>\n\n\n

Next decision: Are you going to handle maintenance and repairs yourself<\/a> or hire a property manager? Upkeep and landscaping can eat into your profits. You can save money by doing it yourself and installing low-maintenance landscaping<\/a> such as xeriscaping and ground covers.\u00a0 Keep in mind: You\u2019ll need to be available when things go wrong: plumbing disasters won\u2019t wait for the weekend. You can save yourself this hassle by hiring a property manager, but it\u2019ll cost you. The going rate is around 10% of the rent.\u00a0<\/p>\n\n\n

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Research Financing<\/h2>\n\n\n

You usually need a down payment <\/a>of at least 15\u201320% for an investment property, unlike the lower rates for your primary residence. Lenders consider these loans to be higher risk, so you\u2019ll pay more to finance a second property. Interest rates can also be higher, and approval requirements for loans can be stricter. The financial experts say it\u2019s a good idea to have other debts paid (student loans, credit cards, medical expenses, etc.) before seeking this kind of loan.<\/p>\n\n\n

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Where and What to Buy<\/h2>\n\n\n

Location, location, location. Cliche, yes, but this is crucial for any real estate purchase. Research the area you\u2019re considering. Homes in West Asheville may cost you more, for instance, but they\u2019ll rent out faster and for a higher price.  <\/p>\n\n\n

Research the population growth. With an influx of more than 30 people a day<\/a>, rents are going up in Asheville, so you should have no trouble covering your mortgage and expenses. You also want to take note of the number of vacant properties in the neighborhood. If there are a lot of empty rentals, that isn\u2019t a good sign. Safety is another consideration, and if you\u2019re hoping to rent to families, so are good schools<\/a>. It\u2019s a good idea to research the area first, then look for specific properties.<\/p>\n\n\n

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Should you Flip?<\/h2>\n\n\n

Flipping\u2014or renovating a fixer-upper needing a lot of work, then selling it for a profit\u2014may not be the best bet<\/a>, especially at first. If you don\u2019t have contractors who can do the job cheaply, you\u2019ll probably spend more than you bargained for on renovations. Focus on properties needing smaller repairs that fit your budget.\u00a0<\/p>\n\n\n

If this is a vacation property you\u2019re hoping to sell for a profit down the road, ask yourself similar questions. Is the housing market strong in that area? What is the cost of ownership? How often will you be able to use the property? If you\u2019re hoping to use it as a vacation rental, you\u2019ll need to do the leg-work yourself or hire a property manager.<\/p>\n\n\n

Like many money-making ventures, investing in real estate requires an upfront cash infusion and can take time to pay off. But with some due diligence and good timing, you can make a pretty penny off your investment property.<\/p>\n\n\n

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Paul Ryan is an aspiring novelist who supports his hobby with his investment properties. He owns three homes which he maintains himself and rents out. His biggest pet peeve? Tenants who don\u2019t mow the lawn regularly.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Guest Post by Paul Ryan  A penny saved is a penny earned, but a penny invested can turn into dollars down the road. Buying an investment property can be a solid way to make money and diversify your portfolio. It also comes with some costly downsides. Here are some factors to consider before you decide… Read more »<\/a><\/p>\n","protected":false},"author":6,"featured_media":19278,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[20,152],"class_list":["post-19280","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial","tag-investment-properties","tag-property-management"],"acf":[],"featured_image":null,"_links":{"self":[{"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/posts\/19280","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/comments?post=19280"}],"version-history":[{"count":0,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/posts\/19280\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/media?parent=19280"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/categories?post=19280"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.naibeverly-hanks.com\/blog\/wp-json\/wp\/v2\/tags?post=19280"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}