It's all about the #'s and not emotions w/ Investment Property! No matter how many times I try to sell the "newness," the upper end quality of finish work, high end appliances and ideal location to other agents or potential investors, the answer is "don't waste your breath, it's about the #'s." Yes, some of the features can bring higher rent but when it is all said and done, it truly is all about the numbers with investment properties.
The idea of owning rental real estate seems to be gaining popularity as investors tire of the highs and lows of the stock market. As more investors make the shift from Wall Street to Main Street USA (income properties), determining the potential investors time horizon of ownership is the first and primary question: Long Term - the longer a property is owned the more $'s that will be poured into maintenance, repairs and improvements, Short Term - the shorter a property is owned the higher the investment risk (i.e. look at the last 2 years the investment risk was high). A rental will most likely appreciate over 20 years of ownership but there is a higher chance that it could depreciate over 5 years. For small investors (one or two properties), long-term ownership makes the most sense - not only will you have plenty of time to ride out the swings in the market but the rental income is a sweet supplement to your mainstay.
Just like investing in the market, investing in incoming property MUST BE NON-EMOTIONAL. Typically with investment properties, the profit (return) is made on the purchase - not the sale. Investing in income properties in a HOT market can more likely lead to a poor investment because emotions (ego) can get the better of you. Unlike a purchase of a personal residence, income/investment property is tough tougher to get out of because when you go to sell It's all about the #'s and not emotions w/ Investment Properties!
With income properties, it is critical that your rental income covers mortgage, taxes, insurance, maintenance/repairs and vacancy. Tax deductions do come into play whether the work is maintenance/repairs versus improvements. Bottom-line positive cash flow is good.
A great website to analyze whether a potential property is a good investment is: http://www.goodmortgage.com/calculators/investment_property.html
OK - now check out a listing that I have that can be a terrific return on investment.
4 TOWNHOMES (CONVENIENTLY LOCATED TO DOWNTOWN PULLMAN AND WSU CAMPUS)
411, 415, 431 and 435 Spring Street. Built in 2008, all 4 townhomes come 3 bedroom, 3 bathroom, 1 car garage w/ offstreet parking. The newer construction means a lot less maintenance and repairs. Current rent on each unit is $1250/month.
2 Duplexes (adjacent to the 4 townhomes)
405 SW Spring St - 6 bedrooms (4 up and 2 down)
425 SW Spring St - 5 bedrooms (2 up w/ possibility of adding a 3rd in attic) and 3 down.
So with rates low (PMMS® in which the 30-year fixed-rate mortgage (FRM) averaged 4.96 percent) and prices lower, CONSIDER AN INVESTMENT IN PULLMAN (HOME OF WSU).
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