Now may not seem like the best time to make any investments. But don’t rule out the idea completely.
Read more to learn why now is the best time to consider that second home or investment property.
Why now?
With interest rates being at a record low, the potential for a recession has attracted the minds of many buyers.
Given the status of the stock market, now might be the time to reassess asset allocations and consider how Real Estate may fit into the equation.
Real Estate is a tangible investment that holds potential for both appreciation and cash flow. And with rates low and a good selection of inventory, you have the upper hand in negotiations.
Benefits of purchasing an investment property
Investment properties can hold many advantages. It’s an asset and a good way to generate passive income. Sometimes, it’s even a tax write-off.
Generally, there are tax benefits to winning an investment property. These benefits could be one that mortgages provide and so much more depending on how you rent it out.
Holding a property for appreciation and cash flow is a huge advantage of buying an investment property.
Not only does it diversify your investment portfolio, but it also protects your net worth when the market goes up and down.
Determine what you can afford
You don’t have to be rich to invest in a property or second home.
To determine whether you are ready to buy, ask yourself these two questions: Are you cash-flow positive, and could you handle six months without receiving rent?
If you can answer yes to both those questions, now is the time to consider investing.
Obtaining a pre-approval will let you know just how much a lender is willing to give you for the purchase of your investment property.
Before you invest, take time to prepare
Although it’s enticing to consider investing, make sure to prepare yourself for the possibility of running into a problem or two.
Investment property owners will be responsible for repairs, maintenance, for tenants not paying rent on time, and for the time that might elapse between tenants.
Because of this, it’s a good idea to have cash on hand before purchasing that investment property.
It’s also wise to research the appropriate legal vehicle, typically an LLC, with sufficient insurance in place.
This way if a tenant gets hurt in your property and decides to sue, you’ll have the right insurance policy in place to cover this.
However, consult with a legal professional and determine which policy is best for you and your property.
Consider a Property Manager
If all the above seems like a lot to take on at once, consider a Property Manager.
Managing a rental home can be incredibly time-consuming. From marketing the property, screening tenants, coordinating the move-in, collecting rent, and overseeing repairs, it can be a lot of work.
Let a property management service take those burdens off your shoulders while you sit back and enjoy your source of passive income.
