Is Now a Good Time to Invest in Real Estate?
Whether you recently started thinking about investing in real estate or you had the thought in your mind for some time now, you may be wondering if this decision is the best at this moment. Keep in mind that the current situation is not expected to have a major effect on the real-estate industry; recessions do occur, and the industry does fight through them. Of course, speaking with the appropriate professionals about your specific situation is necessary, and so is taking some smart steps that would apply in many scenarios where investment was an option.
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Set a Realistic Budget
One of the earliest phases of the process involves setting a realistic budget. Without a budget, you can’t even start to narrow down the possible properties that you might purchase or the neighborhoods in which you might make your buy. The budget needs to take into account the amount that you can get approved for and the amount that you can realistically pay. To determine the first factor, consider obtaining pre-approval. A pre-approval can help you to feel more confident in knowing that you can purchase a house at that cost.
Still though, you want to ensure that the property is actually affordable. In other words, you need to account for all of the other bills that your investment property will come with. Those bills include regular household bills in addition to modifications that you’re planning to make to the property. You might plan to buy the property as it is, but many owners of investment properties do make some modifications. An ideal plan is to make a list of all of those bills. Then, see if you can actually set the money aside for a number of months without struggle.
Save Your Down Payment
You also need to determine if you’re going to make a full down payment on the property or opt to put down less than the standard amount. If you are choosing the latter option, you may need to pay for private mortgage insurance. Speaking with the professionals is a smart way to find out how much of a down payment you might need to make in order to purchase a property that you want.
Keep in mind that putting more money down will mean that your monthly payments are less. Essentially, you have to determine if you want to pay more now or later. Remember that your monthly payments come with interest, so if you are able to make a larger down payment, doing so is advisable. Determine how much you can set aside per month. Once you have accomplished that goal, see if you can allocate some more so that you can reach your goal in a shorter period of time.
Know Your Credit Score
Purchasing a property means that your credit score is absolutely going to be taken into consideration. One major effect that your credit score has is on whether or not you can actually qualify for the purchase and how pricey of a house you can purchase. Bad credit scores could mean that you qualify for only smaller houses that need a lot of work or that are located in areas with high levels of crime. Of course, programs do assist to help people with bad credit scores through the process. If you do have low credit scores, speaking with such an entity is advisable.
Your credit score can also determine how high your interest rates are. In simple terms, if you have lower credit scores, you are likely to see higher interest rates on your loan.
For this reason and for the purpose of buying as desirable of a property as is possible, you want to work to improve your credit scores if they aren’t in good shape. In order to do so, you first need to know what your credit score is. Remember that improving credit scores can take some period of time. In the event that your credit scores are currently low, you may decide to delay your plans to invest in a property so that you can work on boosting your scores.
Consider Property Types
You also must think about the type of properties that are available. For example, you may see a number of houses and condominiums coming up as investment properties. Your budget will at least partially play a role in the type of property that you want. Also, think about if you plan to use the property yourself. Some people buy investment properties with the idea that they will spend vacation time there with their families. Therefore, you would want to ensure that the space is large enough for the family.
Furthermore, seriously evaluate where the property is located and what might attract visitors to the area. A quaint house can be quite appealing in a rural setting near a lake. On the other hand, visitors to an area popular for amusement parks or beaches may prefer a condo. The number of outdoor attractions in the area could influence how large of a space visitors want to rent.
Evaluate Airbnb Opportunities
As you’re looking at the type of properties, also evaluate if you would want to use Airbnb or not. With Airbnb, you might have the opportunity to rent out individual rooms or floors in a house. For example, you might invest in a property that has bedrooms and bathrooms on both the first floor and the second floor. Then, you may have the ability to rent out each floor separately to Airbnb guests. In the event that you want to pursue Airbnb, you must look into whether or not doing so is permitted by any laws governing the property.
Work with a Real Estate Agent
Diving into the purchase of an investment property without the guidance of a real estate agent is highly inadvisable. The process involves a number of different components and terms, and you want to ensure that you are aware of what you’re getting involved in. Further, you want to make certain that you navigate the process in the correct fashion and that you fully understand forms that you’re signing and conversations that you’re having. A real estate agent can also help you to better understand the opportunities that come along with the decision to invest.
Furthermore, a real estate agent assists in helping you to find the listings that are most suited for your purposes. For example, you may have a specific type of property in a certain setting that you would like to invest in. However, thus far, you may have struggled to find that exact option. Working with a real estate agent can improve your chances of finding the right match.
Conduct an Inspection
Obtaining an inspection of the property that you’re planning to purchase is another crucial step. You want to know if any issues exist before you make the final decision to buy. For example, an inspection could reveal that the home or condo is not currently following proper codes or that serious electrical issues exist within the space. Getting the inspection done means that you then have the opportunity to determine if you want to resolve the issues or start looking into other properties that you may prefer to buy.
Now can be a good time to invest in real estate. To heighten your chances of success, make sure that you are moving through the process in an effective way and working with the experts who can help to increase your odds of success in this endeavor.