Given the current economic crisis and the ever plunging real estate rates; it is needless to say, that now, is one of the best times for buying investment homes for profit. If you were to check out the real estate trends in many cities across the country, you will notice that the prices of houses in some areas are lower than they have ever been in the last two to three years. This certainly means that anybody who can afford to purchase a property at this point in time and hold it for a while is looking at sizable capital gains in the future.
How can you make a profit?
The price of real estate always has a trend of moving upwards but buying investment homes for profit is not a lucrative venture if you purchase the property when the market is high. So it is imperative to check out the current market trends preferably weekly trends that are available on many websites before you consider looking at homes in a particular area. In certain states like Arizona, California, Nevada and Florida, the real estate prices have plummeted, offering potential future rewards for buyers. So this is a wonderful time for buying investment homes for profit in these states. Also the fact that the number of foreclosures and short sales are sky rocketing means that you can purchase homes at dirt cheap rates.
Unfortunately very few people can actually boast of enough liquidity to buy a house without taking recourse to regular financing options. If you are going to need a loan, it would be best to analyze your credit before you put in the hard work of rummaging through MLS sites. In this economic environment, procuring a loan is getting increasingly difficult and nothing less than the perfect credit rating will do for the weary lenders. The norm is that you would need a 20% down payment which means that in order to purchase a home worth $250,000 you would need to have liquidity to the tune of $50,000!
What to look for in a home for investment?
Once you have sorted out your finances, make sure that you look for homes in areas that receive renter traffic. Ideally you want the rent to take care of the monthly mortgage payments, insurance, interest and any other arrears. If these expenses are coming out of your pocket your investment is a liability and does not make good financial sense. The house should pay for itself and a little should be left over for you. If you are going to enlist the services of a management company to take care of the home, make sure that you factor in their fees in the expenditure as well.
Look for good public amenities, for instance schools, parks, freeways in close vicinity of the property. This will not only increase its value if you want to sell it in the future but will also attract renters. The size of the home is an equally important consideration. For example, take a look at the area if you see swings in the yards, you can be sure that most homes have young children; buying a home that is too small to raise a family in such an area may mean that you would be stuck with it for long.