Thinking of Investing in Real Estate? Now might be the time to gt off the fence and start buying.

By
Real Estate Agent with Atlanta Fine Homes / Sotheby's International Realty

With the decline in housing prices and the demand for rentals up, now might be the time for you to consider investing in real estate.

There are basically two strategies in investing in residential real estate.  They are buy and hold, and flipping.  Each avenue has a slightly different approach and criteria used for selecting the right house. 

They are as follow:

What to look for if you're an investor looking to Buy and Hold:

  • A house in a neighborhood that is not on the decline.
  • One that is structurally sound
  • That need only cosmetic changes
  • That only need $10,000 to $15,000 in repairs and upgrades
  • That can generate good cash flow*

When searching for my clients I keep these in mind in evaluating the listings on the market.  You should also look at the rental history for a neighborhood or area for the past two years.  Know what is currently for rent and what the rental absorption rate has been over the past 6 months.

 *In my area, which includes Woodstock, Canton, and Holly Springs, GA, I have seen an increase in the number of rentals on the market and a slight decrease in rental rates in some areas over the past year.  The increased numbers are from home owners not willing to take a loss on the sale of their homes and are trying to hold out until prices improve (this will be covered in a future blog). 

What to look for if you're an investor looking for a Flip:

  • What will be the after repair value (ARV) of the house*
  • Have realistic idea of what the expenses will be and the holding time
  • Holding cost - Debt service, Utilities, etc.
  • Realtor Fees
  • Permitting and inspection time frames and cost (each city and county are different)
  • Get quotes from licensed  reputable contractors (have a realistic repair budget)
  • Look for houses in a neighborhood that are just starting to turn around.
  • Look in areas with new high-end commercial, and/or improved infrastructure (roads, parks, etc)

 *Avoid buying houses in need of these three costly repairs or adjust for them in your offer.

  • Homes built prior to 1978 because of the lead paint abatement issue.  Its removal is costly and has hefty fines if not performed by a certified company
  • Homes with foundation issues
  • Homes with mechanical system issues (electrical, HVAC, plumbing, etc.)

 

My final tip in today's blog :  Find a good real estate agent with experience as an investor, as well as experience working with other investors.  Their knowledge and experience could be invaluable to you in your search for the perfect investment home.

Comments (2)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Linda, now would be an excellent time to get off the fence... whether you are a first-time buyer, or an investor.  The rates are incredible, and there are plenty of good buys out in the market.

Mar 06, 2011 11:53 AM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

By the way... I see that you have only included this post in ONE of the Active Rain Groups.  The folks at Active Rain suggest that you join enough groups so that you can include each post in as many as FIVE Active Rain Groups.  The more groups each post is listed in, the more sets of eyeballs that read them... and then, of course, the more chances you have of getting comments.

Here is a tutorial I wrote some time ago on the Active Rain Groups feature.  It has lots of good ideas, and I have been told that many Rainers found it useful.  Using the Active Rain "Groups Feature"

Since you are new... I invite you to go to my blog, and read some of the Newbie tutorials I have written.  I am sure you will find them useful.  Also, I see that this is your first blog post, and you obviously have a nice writing style.  I am going to subscribe to your blog, and I invite you to do the same with mine.  Take care...

Mar 06, 2011 12:01 PM