Did you know that renting a property is twice as expensive as owning property? Due to the strict debt to income rations, and higher down payments there is a void of first time home in the market which caused a big slowdown in the residential housing marking.
The owner occupied housing market is only a tiny piece of the overall residential property market. Investor purchased property is on the rise at high levels! One of the obvious reasons is more individuals are becoming aware of the need to add real estate to their overall financial plan and retirement plan. You can spend $40,000 on a down payment on a $160,000 property and get a mortgage for $500, and rent it out for about $1,000. That is passive income, right into your pocket!
Even when you consider additional expenses into the mix, of a property manager, that is still only about 10% of your monthly income. The capitalization rate is far superior to other investment models and you are guaranteed success asn an investor if you play your cards right!
At the risk of sounding like a really bad infomercial… There’s more!
There is one more element to really consider as a bonus for becoming an investor in real estate: Appreciation.
Even with the great housing collapse, we are still seeing properties increase in value without much effort at all. In booming markets like Salt Lake City, that appreciation is well above market standard.
A great way to start your search for the perfect investment property is looking into bank owned homes. Most of the bank owned homes are not in the condition you would expect from a foreclosure years ago. Due to lending standards, and condition standards, you can easily find foreclosures that qualify for a ton of financing options, or that need very little to bring the property to a safe rentable condition. While closing on those properties can take a bit more time, it may all be worth it for your return on that investment!
There are a few things to watch out for though. There are pocket areas where investing in a property may cause additional challenges. Make sure that you reach out to a property manager, or real estate agent who knows the ins and outs of neighborhoods to make sure that you are investing in the right area within a metro area!
A red flag to keep an eye out for is an investor, selling an investment property. It could mean there are a few financial telling signs that investor is looking to rid themselves of, such as low rents, repairs, taxes, or an area that is not headed in a great direction.
While the market may be in a great position to become an investor, put in a little TLC and have a great return on investment, just remember that there are things you still need to be cautious about. Due diligence will be your best friend. Talk with the experts, talk with those who know the rentals in the area to get a sense of what you can realistically expect. Don’t let those cautionary flags prevent you from making one of the most important and exciting decisions in securing your financial future for yourself and your family!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.