First timers are steadily jumping off the fence and beginning to make decisions about purchasing investment property - whether to keep it for a rental or fix up and sell. When some first-timers start crunching numbers - they are hard pressed to part with their cash when faced with down payments of 20% or more, close costs, repair expenses, monthly loan payments, etc.
They like the positive upside and the potential profit for investment - but struggle with letting go of their "pile of cash" sitting in the bank.
What to do ... what to do??!! Here are some tips to help ease the struggles:
Start by hiring an experienced real estate agent who can provide you with facts about buying, selling and/or renting investment property. Your Realtor should have available a list of several professional resources to answer questions about taxes, remodeling costs, inspections, etc.
So you have a pile of cash in the bank? What's it earning you every month? Is it better than what a rate of return on a rental property or a fix and flip will net you? Look at the pros and cons of a short vs. long term investment when you crunch the numbers.
How much do you need or want to SEE and keep in reserves in your bank account? Keep that amount and use the rest as a basis for a purchase price, monthly payments for at least six months and cost to repair a home.
What's your "big picture" goal? Buying to rent and then sell down the road? Or do you want to try to buy something relatively cheap, fix it up and make a profit? Either way, an experienced Realtor can provide numbers on "worst case - if you had to sell it" price, costs associated with selling the property, etc. In the later case, don't expect to make a ton of money on your first go round - rather set realistic expectations.
Do you have an accountant? If not, get one. They will give you the best tax advice, know the rules about investment property, Schedule E's, depreciation, etc., and s/he will be the first person you go to after you receive your proceeds check from the sale of investment property.
Once you have a plan - your next big hurdle is - spending the money. You will have to part with your money in order to make money and build your net worth with real estate investment purchases!
Gabrielle (Kamahele) Rhind - 2009. If you want to reprint parts of this - just email me for my permission rhindohana@msn.com. Buying or selling Tucson Arizona Real Estate? Click info@gabriellerhind.com and let me know how I can help you! Or visit www.BuyMyTucsonHome.com
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