Here are 6 helpful residential real estate investment tips:
#1—Assess your goals— The days of buying real estate and flipping it for a quick profit are gone. Rental real estate can provide a steady stream of income but it takes work. Are you able to manage your own property? Make repairs? Prepare the rental for new tenants? If not you’ll have to hire someone to do it for you.
#2—Know your neighborhood—Real estate is all about location. Know what you are getting into by doing your homework. What is the zoning? What is special about the area that will be attractive to renters? What are other properties in the area renting for?
#3—Buy local— There is no area that you will know better than your own. Purchasing in your community makes it possible for you to keep an eye on your investment and self-manage your investment if you so desire.
#4—Best bet: a one bedroom condo—The sweet spot in the rental market is single people: young singles, divorced middle-age, and retired widows. Most of these people don’t need or want a larger unit because it offers the best value as a renter. Plus, it is one of the easiest property types to self-manage.
#5— Buy at a good price – There is an old saying that you don’t make money when you sell a real estate investment, you make it when you buy it. The challenge is to buy it right. If you can buy a property at 10—12 times the amount of its annual rent you are probably getting a good deal but this does depend upon the type of property, location and prospects for appreciation. Do your homework so you will know your monthly costs as this will limit how much you can pay for the property.
#6—Make sure you have some reserve cash— If you already own your home you know that at some point you will face unexpected expenses such as a dishwasher breaking, roof leaking, or the HOA coming to you with an assessment. You will need to keep a cash reserve on hand to take care of any surprises, including the possibility that your unit might be vacant for a period of time.
Utilizing these 6 tips as part of your due diligence process will help you in determining if, in the final analysis, it is worth investing in a particular residential property.
CEO, Employing Broker
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters in Lakewood, Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area in Denver with satellite offices in Chicago, Las Vegas and Miami market areas.