So you’re thinking about buying some investment property, what are some things you might want to consider?
First of all, you want to keep in mind that the parameters that you use for buying investment property are seldom the same as what you would use if you’re buying a house that you’re going to live in or even a vacation home. There are a few different business models that you can use. And we’re talking mainly about residential investment property.
So you can do short-term rental, you can do long-term rentals, you can do mid-term rentals. But also, look at how you want to build that portfolio or even just get started if this is your first one. So one of the most ideal business models is something where you’re going to have immediate cash flow, but particularly in this market, that is often kind of hard to come by to find something where your mortgage is going to be less than the amount that you’re charging for rent. So that is kind of a delicate balance, and something that requires some calculation, and sharpening the pencil to get to the numbers where they need to be.
The second business model is where it covers itself pays for itself all along to a degree at least, but appreciates over time. So you’re really banking on that appreciation over time. So that would be a scenario where your mortgage is $2,000 a month, and you can also get $2,000 a month in rent. So you do not have to necessarily lay money out every month except for repairs or upgrades and things like that. But it’s not making money every month. Nothing is going back in your pocket until you go to sell or it appreciates over time.
The third and one you see a lot of investment people and motivational people talk about is “house hacking”. And what does that mean? If you don’t know house hacking is where you buy a multifamily property. So a duplex or a triplex for a quad and you live in one unit and rent out the rest. This is a fantastic scenario, especially if you’re a first-time buyer, if you are not tied up on your first home, particularly your dream home. Or if you just want to focus more on building wealth and building that investment portfolio. So often, it’ll pay for you to live there. If your mortgage is $3,000 a month on a duplex, for example, and you can charge $2,000 a month, then you’re only paying $1,000 to live in the other unit. You can do this every two years really, and keep swapping up just building your portfolio rather than renting that unit that you’ve moved out of doing it again and doing it again. So often you’ll hear people talk about House hacking. That’s what that is.
So if you want to get started in real estate investing, one of the best things is, obviously, to give me a call, call an agent in your market who is familiar with investors and working with investors and real estate investing so that you can sort of get the lay of the land and figure out what business model works best for you for your finances, for your family for your future, how you want to do it, because then you can really focus on the properties that are going to work to fit into that business model. But if you’re curious about investing, I do have a lot of experience working with investors. I have done this myself. So I know a lot about the process of getting there and going through and some of the pitfalls that you might want to avoid. So give me a call send me a message shoot me an email and let’s talk.