In my last post I spoke about 3 types of investments; being a landlord, flipping a home and speculating a market. We went over the risks and rewards and now we are going to go over what research and homework you need to do before making your purchase.
Let’s first discuss speculating a market. The best advice I can offer you is to double check and triple check your source for the information. Remember I warned in the last blog that this is by far a more dangerous type of investment. For the most part you can’t control this investment so make sure you confirm sources.
Now let’s get into flipping a home. This is by far the most popular with all the TV shows that show this to be so fun, exciting and profitable; so what research do you need to do? First, make sure you have all your financing in place. If you have any questions on how to do this I write later about it or feel free to contact me for available financing options. Second, don’t get in over your head. If you don’t have a builder’s license don’t pretend you do; know what your limitations are. Next have all your contractors lined up. Make sure they’re reliable and come highly recommended. Next make sure you have a solid budget; build in a 10% mistake budget. Once you have all these lined up make sure you know from your realtor what the resale price will be and the time you can expect the home will be on the market. Once this all begins keep a close eye on your numbers and your relationships with all your team members.
The third type, “being a landlord” first secure your financing and second, understand all the responsibilities that go along with being a landlord. You need to be able to offer a clean, safe and quiet residence for your tenants. Consult with a realtor for fair market rent expectations and check your own by looking on Craigslist and other apartment rental sites. Next keep a close eye on general expenses, landscaping, water bills, vacancy, etc. You also need to be prepared for your tenants’ personal issues now becoming yours, when they can’t pay their rent on time or because their relationship with their spouse is causing them to make too much noise. The answer to all of this is to be upfront with the tenants; what they can expect from you and what you can expect from them. You can hear all sorts of bad stories but truth be told; if you’re a responsible landlord you’re going to be a successful landlord.
Please see my power point presentation to help you make your decision as to what type of investor you want to become. On my next blog we are going to learn how to find these opportunities and how to get started.
As always, please feel free to contact me to set up a time or to answer any questions you may have. The advice I offer is from real life experiences; I’m not only a realtor helping sellers and buyers purchase and sell homes, but I also own homes throughout the country. I don’t tell you this to impress you but to impress upon you to learn from my mistakes and successful investments.
John Connolly
john@johnconnolly.com
johnconnollyrealestate.wordpress.com