Now that the housing market has entered a period of growth, many people are considering purchasing investment property. Market experts point to statistics showing that now is a great time to buy. Data from the U.S. Census Bureau confirms that the supply of rental homes for sale and the demand for tenants are high. In 2012, renters occupied approximately 14.9 million single-family dwellings and the vacancy rate was 7.3%. However, prospective buyers should be aware of the work and expense required before rushing out to look at homes. Purchasing homes for sale as investment properties can be a sound strategy if prospective buyers carefully plan before buying.
Prospective buyers should begin their research by considering how much they can spend and what kind of property they want to buy. Your budget may dictate whether you can afford a single-family home, a condo, or an apartment building.
Next, secure financing. Avoid looking at homes before finding out how much you can afford to spend to avoid the disappointment of falling in love with a house you cannot afford. Knowing your limit will help narrow your search.
After you know your budget and the type of dwelling you want to purchase, it is time to start shopping. Location is key, as with any real estate purchase. Searching for homes for sale in areas where prospective tenants will want to live will help ensure that the house remains occupied and allow you to charge a higher monthly rent. Properties located in areas zoned for good schools, near a downtown business district, or in a low crime neighborhood are attractive to potential renters. The property’s location will also dictate the type of renter you will attract and how often it may be vacant.
Buyers new to the rental market may want to consult with a realtor. An agent with experience in investment properties can help buyers search the real estate listings for homes in the area in which you would like to buy. He or she can also be a valuable source of information regarding neighborhood trends that make the area attractive to tenants or identify up-and-coming areas you may not have considered.
While purchasing homes for sale with the intention of renting them can be an excellent investment strategy, banking industry professionals urge caution. They warn that while historically low interest rates make purchasing a rental tempting, prospective buyers should exercise diligence before taking out a mortgage. Consider annual expenses such as taxes, insurance and maintenance when determining the real cost of the investment. Additionally, prospective investors should also consider the time they will need to spend making repairs, or the cost of hiring a property manager to handle them for you.
Investing in property can be a great way to pay off debt, save for your child’s education, or earn extra income. However, in order to realize a return on your investment, you should thoroughly research your local market.
Derrick is a Memphis native specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com