Real Estate Chic is a monthly feature with local housing news you can?t afford to miss and insight you always wanted to know!
Recently I had a past client contact me asking about a house for sale down the street from her. I was thinking it seemed a little soon for her to move considering she bought her home only a year ago. Well, she was not looking to move but instead is interested in buying an investment home she can rent out. With interest rates at a record lows and as rents continuing to rise, it makes it a great time to invest in Seattle real estate. Investing in real estate may not be a cakewalk but it is guaranteed to be one of the best ways to plan for future financial security.
What should you think about if you are considering buying an investment home?
Think long term- Real estate investment is not a get rich quick scheme. You want to invest in real estate because you plan on holding on to it for a very long time. Ideally if you take out a 30 year loan on your investment property you want to keep it for 30 years while the mortgage is paid off by tenants.
Owning Rental properties takes work- Again, if something sounds too good to be true it probably is too good to be true. When you own rental properties you are responsible for managing someone else?s living requirements. If you are on vacation you may still have to deal with a leaky faucet or a sewer back-up. Of course you could always opt to have a management company which will cost you on average 10% of your monthly rents. Just make sure you understand the effort you will put into finding the right tenant or painting the walls and they won?t feel like such a big deal when you end up doing it. As long as you are thinking long term you won?t get too caught up in the day to day or hopefully year by year maintenance.
Be prepared for the unexpected- Congratulations if you found a home where the monthly rental amount is more than your mortgage. Just remember there are maintenance costs you have to consider. First you will have a vacancy rate where the home sits empty while you prepare it for rent and search for a new tenant. Second you will have regular maintain that is easy to forget about. Remember that leaky faucet? It needs to be repaired quickly. If you budget for your rental home the save way you would for your own home you won?t ever feel frustrated and instead you will feel the pride of ownership.
Loans, loans and more loans- Buying an investment property is always a little different in the eyes of a lender. You will need to make sure you have 20% as a down payment.
Rents are rising- In Seattle and most of the Puget Sound area rents are going up faster than home prices. Your mortgage payment will likely be a fixed amount but the money you collect in rent over time will continue to rise.
Now if you have decided an investment home is a good option for you congratulations. You can look forward to an additional income stream. If you choose to continue investing beyond your first property you may even be looking at an early retirement.
As you search for this investment property I have a set of criteria to think about. For each individual the desired investment property may be different and it is best to sort through the different options with a professional. Ultimately you want to think about a property that is in good condition and that people like yourself would want to live in. You probably want to stay away from areas with high vacancy rates and instead focus on desirable areas where you can easily fill your units. You might even consider renting out your own residence and moving to a new home.
Taking the plunge into home investment is a very exciting process. You will be making an investment in your future you can guarantee to pay off. Even if you put aside home prices and appreciation you can be sure your mortgage will be paid off in 30 years and you will be left with an asset that can continue to make you money or that you can sell at market price.
Brooke Davis
Brooke Davis launched her career as a Realtor in early 2005, leaving behind a job in PR to follow the dream of running her own business. Despite the challenges of the recent economy Brooke has been able to maintain a strong sales record earning awards every year with Remax. She is a graduate of UW and holds an ABR and SFR designation. Read her blog at, brookedavisrealestate.com or catch her driving through your neighborhood!
* This post is from a Girl Power Hour featured blogger. It is not written, edited or endorsed by Girl Power Hour. The authors are solely responsible for content.
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Source: http://girlpowerhour.com/real-estate-chic-home-investment-101/
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