Buying an investment property right is the key!
July 13th, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer Posted in real estate investing | No Comments »
Buying an investment property right, so that it cash flows is the key to making money with the buy and hold real estate investment strategy. Even the newspaper is saying it, so you know it has to be true. Of course when I say buying it right, I mean buying it cheap enough that it has positive cash flow.
Until the drop in the market, finding a cash flowing property in the Seattle area market was a pretty difficult thing to do. Unless of course you wanted to put 30% down which seems a bit over the top to me. Now with the market down and banks cutting deals on REO and short sales, I am definitely seeing more properties coming through that make sense to buy.
Part of buying a residential real estate investment property right, is getting all of your costs worked out ahead of time. That way you will know if it is going to have positive cash flow. One larger item that many people forget or think they can do themselves is property management. I strongly encourage everyone to hand that job off to professionals.
Yes, property managers do take a cut of the revenue, but consider that the reduction in headaches and time spent dealing with your rental property is well worth the price. Additionally a good property manager will save you money by screening for good tenants, and not letting bad tenants slide on the rent. I have seen a good number of owners get stiffed because they bought a tenants sob story on why they couldn’t pay the rent. Of course they always say they are good for it, but hardly ever make good on the promise!
If you have pulled your money out of the stock market and are wondering what to do with your 401k or IRA, consider buying a rental property or two. Whether a single family home, duplex or fourplex, the numbers are looking better than they have in a while, and as bad as it has been in the last few years, the real estate market looks a whole lot more stable than the stock market these days!
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