Why is it a great time to buy residential property for your personal investment portfolio? Lots of inventory, low mortgage rates, and motivated sellers. In addtition circumstances that make it harder for some buyers to own increases pool of renters. "There's a better opportunity now in a lot of ways. During the top of the market, you couldn't get the investment numbers to make sense and provide cash flow in many higher-priced market's," says Nelson Zide, CRB, CRS, with ERA Key Realty Service in Farmingham, Mass., who's been a reale state investor since 1981.
And while purchase prices for homes have fallen in many areas, rents haven't followed suit. This means enough cash flow in your pocket to cover debt, says Terry Reitz, whith Keller Williams Legacy in San Antonio. (By Mariwyn Evans)
Here Are Your Six Tips...
1. Think Cash on Cash: Determine your return based on the equity you have in teh deal, not the total price of the property.
2. Make Your Money On The Buy: Don't make the mistake of believing that the asking price represents the final price or value or expect short-term appreciation to bail you out. Do your analysis and negotiate notes Still.
3. Get Preapproved for A Loan: Get a mortgage preapproval before you begin looking at properties. Otherwise, you miss a buying opportunity in this dynamic market.
4. Protect Your Assests From Lawsuit: Always hold each investment property in a limited liability company or other legal entity to protect the rest of your assests in case you're sued.
5. Don't Buy More Than You Can Manage: With more than 10 or so properties, you'll probably need a professional manager or you'll take too much time away from your selling career.
6. Don't Overlook Deductions: Even if a property is generating income, tax deductions for depreciation and expenses such as milage related to managing your investment can reduce your taxable obligation.
