Purchasing Property As An Investment

Yes, there is money to be made in real estate, but there are some things to know before diving in.

Have you ever wondered what it would be like to enhance your income through real estate? Maybe you rented a home from someone who owned several, and they Is it time to invest in property?always seemed like they were “rolling in it.” Or perhaps on a sleepless night, you tuned into an infomercial extolling the virtues of owning property as an investment.

We’ve seen an interesting year in real estate, with property values once again resuming their climb after losing ground during and immediately after the great recession that struck our economy a half decade ago. With that, our minds begin to imagine all the wonderful things that can happen with positive equity…and positive cash flow.

Becoming a property manager can provide you with extra income, but there are some things you should consider before making that investment.

1. Run your numbers back and forth.

Yes, this mixed batch of metaphors provides you with one of the most important elements to consider when purchasing a property as an investment. Remember, it’s not just the price of the home you need to consider, but closing costs, maintenance, marketing costs, and your own valuable time to name only a few. One other very important factor to consider is that the interest rate on your mortgage loan will most likely be higher due to the fact that you are not occupying the home yourself once you close escrow.

2. How much can you competitively charge for rent, but still make a profit?

Remember that along with your monthly mortgage payment, you will also have to pay for property taxes and insurance, plus marketing expenses, PLUS maintenance, etc. Can you charge comparable rent in the area you wish to purchase AND achieve positive cash flow?

3. Know the laws before making your purchase.

There are state, federal and local laws that you must follow when renting a residential property. Understanding your legal rights and obligations as a property manager can save you trouble (And a possible lawsuit) down the road. The California Department of Real Estate has put together a guidebook to help you familiarize yourself with things you need to know about managing a property.

Want to know more about how you can achieve positive cash flow through property investments? Contact the Lichen-Hooper team to find out more.

Cheryl Lichen-Hooper
Keller Williams VIP Properties
25124 Springfield Court, Suite 100
Valencia CA 91355
Office: 661-505-8102
Cell: 661-810-7669
Fax: 661-251-2648

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