Dear Friends and Hopeful Homeowners,
Real estate investing is hotter than ever, and it’s no wonder why.
Mortgage rates are low, home prices continue to grow, and demand for rentals is strong.
But if you’re interested in investing in real estate, where do you start? And what do you need to know? Here are five helpful tips I’ve gathered from successful real estate investors to help you out:
1. Don’t stick to your own backyard
Many fledgling real estate investors limit their search to neighborhoods they know well. This might cut into your potential for profit. The best deals might be a bit further away, and emerging neighborhoods might offer better growth potential and tax incentives.
2. Use the 1% rule
A good rule of thumb for real estate investing is to look for properties that will offer a monthly return that is greater than 1% of the sales price. In other words, if a home costs $100,000, you should only invest in it if you expect to get at least $1,000 a month in rent.
3. Don’t over-rehab
An investment property doesn’t have to look like a Pinterest photo shoot. Instead of trying to convert an investment into your dream home, go with middle-of-the-road fixtures—and save yourself both time and money.
4. Look to single-family rentals
Single-family homes tend to consistently appreciate. They are also most likely to attract good tenants, and they are something you have direct experience with and can evaluate personally.
5. Understand the tax benefits
It pays to know the many potential tax benefits associated with real estate investing. These include depreciation, mortgage interest and maintenance deductions, as well as the benefits that come from investing through qualified plans like self-directed IRA accounts.
Now, these five tips are valuable, but they are only a start.
If you’re seriously considering real estate investing, I’d advise you to first take a look at some of the great homes available around the Central Pennsylvania area:
And if this gets your investment appetite going, email me at Andrew@KronenbergREG.com. There are two reasons why.
First, I can give you my impressions about which types of homes (and in which neighborhoods) might make for a sensible first investment.
Second, I can also point you to other professionals I personally trust—mortgage brokers, tax advisors, contractors—who can help you make that first investment profitable with minimal fuss.
I’m here to help.