Aside from purchasing a house for your own personal enjoyment, you might also be considering the purchase of an investment property. While the purchase of your own home is definitely an investment, there are other reasons why you might be looking to purchase additional property. Although the process is pretty much the same, there are a lot of different considerations that should be made regarding whether this is the right option for you. When you purchase a house for yourself, you are thinking about your own tastes and what works best for you and your family. Investment Properties, however, are purely about financial gain as these are not owner occupied. Although finding the right investment property can require a lot of work, the Megan Dowdy Realty Team can offer our expertise and guidance on choosing the right property for your individual needs!
Finding the right investment property can be time consuming and require a great deal of patience. We can work with you to help you understand the property’s value and how you can turn your purchase into a profit. If you’ve spent time watching reality programming on HGTV, you probably already have a general idea on the subject. However, the content that you see on each 30 or 60 minute episode is hardly reality. While some investment properties do include remodeling and “flipping” the property to make a profit like these shows, there is definitely more that is involved and even more to consider in this venture. We will sit down with you and weigh the pros and cons of an investment property as well as explore what options might work best for you.
If you are considering purchasing a property for the purpose of flipping it, there are a lot of factors that should be considered. If you choose to fix up a house in order to sell it for a profit, the sale price should be greater than the combined cost of acquisition, holding the property (which includes paying property taxes and utilities), and all renovations.
On the other hand, you may decide that you want to purchase this property as a long term investment and sell at a later time while your property appreciates in value. We can sit down with you and discuss your options regarding leasing or renting out your property so you can earn money on a month –to– month basis. Also, keep in mind that while you are keeping the property to lease or rent, emergency repairs are inevitable.
Is an investment property right for me?
Now is a great time to invest and make money in the Orlando Real Estate Market. However, before you do, you should definitely have a clear understanding of your financial abilities and limitations. The last thing that you want to do is purchase a house, do some of the repairs, but then fall short on finances to complete the repairs, which will further delay the sale of your investment. This would also result in losing or cutting into any profit that you could ultimately make off your investment. The first priority is to make sure that you have good credit and are financially secure so that your investment is not a financial burden on you or your family. Some of the most important questions that you should be asking yourself are:
- How much money do I have to contribute towards the purchase of my investment?
- How much money can I logically put into to any repairs and maintenance of the property?
- How much time and labor am I willing to invest in this property?
- Can I afford to hire a handyman or contractor for any materials, improvements and fees to complete the necessary work that I can do myself?
- How long can I hold the property for before it appreciates or depreciates in value?
- How long should I hold the property for before the cost of holding outweighs any potential profits?
- If I rent or lease the property, should I pay a property manager to oversee the property and maintenance?
Upgrades & Maintenance
Before you purchase a house that definitely requires repairs, you may want to know what your potential costs and upgrades might be. In some cases, repairs may not necessarily be needed, but some upgrades such as new A/C, new kitchen cabinets, and all new electrical and plumbing definitely add value to a home in the eyes of buyers purchasing an existing home.
Homewyse.com will help narrow the estimate from a low to high end estimate based on zip code to obtain the most accurate pricing. Once you move into your house, you would definitely want to bring a handyman or contractor in to get a true estimate of the repairs and upgrades needed if you are not looking to do these yourself. However, if you choose to buy that investment property, you may want to utilize this tool to get a solid idea of any additional costs that it might incur. From small projects such as having the driveway pressure washed to large projects such as adding additional square footage, Homewyse has estimates for everything. Feel free to use this chart below as a reference of the size projects that you might need to have done on the property.
|Small Project Investment
|Medium Project Investment
|Large Project Investment
|Freshly Painted Walls
|All of Small Projects, plus:
|All of Medium Projects, plus:
|New Kitchen Cabinets
|New Light Fixtures
|New Kitchen Countertops
|Addition of Square Footage
|New Bathroom Cabinets
|New outlet & light switches
|New Bathroom Countertops
|New Sinks & Toilets
|Addition of Garage
|New doors & windows
|Addition of Pool
|Install new HVAC System
|Install new Water Heaters