Nor Cal Realtors!: Is now a good time to buy an investment property?

Investment properties

Interest rates are low and inventory is low as well. Our inventory for all residential listings, which include mobile homes on a permanent foundation is at a total of 940 listings. It takes more than good mortgage rates and property availability to determine if buying residential real estate is a smart investment. Becoming a landlord is a whole different scenario than buying a single property as your residence. It requires, for instance, insight into the economic growth potential of the area where you are planning to buy and analysis of risk levels that are within your comfort zone.

What should I consider?

Real Estate should not, in this environment, be thought of as a short-term investment. If you feel you can hold onto it for at least five years, you will be alright. However, if you plan to flip the property quickly as people were doing about five years ago, that could be a very dangerous strategy.
If you want to get into the "flip" business make sure you use an agent that keeps an eye on the neighborhood trends.
* Keep an eye on what the houses are selling for in the area. What the homes are selling for in price per square foot and the appraised value of the homes sold.

Do the math

* Make sure you can do most of the work yourself, Its alright to hire some of it out, ie: electrical, plumbing etc. but if you can do it yourself and do it properly, it will keep the profit in your pocket, not theirs.

* Add up the cost of repairs, add the loan amount you will owe on the house once purchased, then deduct the price that it can be sold. (remember, your agent should have comparables of the area homes.)

* Another important thing to remember along with, 'Will the home appraise when it comes time to sell?' Is, 'will I have to pay for buyers closing costs?' The answer is, yes, most likely. Buyers now a days are asking sellers to pay the 3.5% of the closing costs, due to the fact that buyers just simply have no money saved. They may have their Down Payment, but that's about all. So you might want to figure that in as well.

Will I make a profit?

Considering everything I said and finding a great price on a home is key to making a profit. Finding an agent that understand how all of this works is also key.

Call us today, I would love to go into this in more depth. I am very knowledgeable about this side of Real Estate. My husband and I do 2-3 'flips' a year, and have had great success!