Do you have some real estate investment questions? Let's learn what questions you, as an investor in real estate, should ask before you buy an investment property. Yes, the real estate market has completely changed in the last three or four years, but the questions you should ask and think about remain the same. Below are the questions you should ask your real estate agent when buying an investment property:
Moreover, for the savvy investor, there are some great buying opportunities out there as the real estate market recovers. In fact, it's not that likely that we will have another real estate crash like the one we experienced a few years ago for a very, very long time. And, with interest still historically low, it's a great time to buy property.
Sure, there might be a crash in the other areas of the economy, say the stock market, but it's not likely that real estate will be hit as hard as it was a few years ago - that was a 100 year flood tpe of housing crash. If anything, rental rates will only rise and property values will increase as the job market stabilizes in the United States.
But don't take anything for granted, even as the real estate market recovers and heats up again, there are still risks to consider. If anything, ask more questions than you normally would and set out a solid plan before you start buying property. If there's one thing that real estate investors learned from the housing crisis a few years ago it was don't take on debt that you can't manage.
The days are gone where you could buy an investment property with no money down. Nowadays, most investors have to put down upwards of 25% when buying an investment property. However, if you're buying a property that was once worth double what you're paying for it now, and below even the average selling rate in the area, a big down payment isn't so bad if there's upside based on the low purchase price.
1. What goals are you striving for with your real estate or investment investment?
- Long term appreciation
- Short term appreciation or gain
- Cash flow
- Combination of cash flow and appreciation
2. How much risk do you want to take on--what's your tolerance level?
- High tolerance for risk
- Medium tolerance for risk
- Low tolerance for risk
- No tolerance for risk (Really, there will always be some risk when you buy real estate)
3. Where is the property you're buying located - will you need to hire a property management company?
- If you're buying a condo or property that's in a different state or city than where you live, then you'll need to hire a property managment company.
- Even if you're buying a property near where you live, it might make sense to hire someone to act as manager or the landlord of the property if you're too busy or have other commitments.
4. Location, location, location. What is the neighborhood like where the property you're buying is located?
- What are the schools like near the property?
- Are there restaurants and stores nearby?
- What is the value of the homes near the property?
- Is the trend in home prices for the neighborhood up or down?
- What are the catalysts that could drive prices higher and bring more renters to the property?
- Is there public transportation close by? Is there area walkable? What are commute times to downtown?
Take a look at these key questions to ask and think about before purchasing an investment property. Visit these pages below for specific things to think about for each type of investment property you're looking to buy and the key aspects of owning real estate as an income generating asset.