The housing market is rebounding and interest rates are still low, meaning an investment property might make a lot of sense for you. Before you move forward with purchasing an investment property, take note of these considerations.
Rental Property – If your property doesn’t generate rental income, you are counting on it increasing in value at a rate higher than inflation. Look at the market that you’re considering and if historically that holds true for homes in the area.
Time Shares – Time shares aren’t generally thought of as an investment, since re-sale can be difficult and — at times — at a lower price.
Real Estate Development – Development deals come with a high price tag and a lot of risk. While the return can also be high, for the average investor, the risk doesn’t outweigh the potential reward.
Foreign Real Estate – Before buying property in another country, make sure you are aware of the differences in their real estate laws and protections. Also take into consideration the country’s economic and political stability.
Associated Costs – If you purchase an investment property, the mortgage will not be your only expense. Consider necessary insurance, differences in tax treatment of investment property vs. primary residence, upkeep and — if you plan to visit your property — travel costs. Once you’ve thought through the considerations above, an investment property may still be a good financial move for you. Interest rates are low, and while home prices are rising, they are still relatively low in many markets.
David Paget is a Mortgage Loan Originator for W.J. Bradley Mortgage Capital, LLC. He may be contacted with your mortgage questions at (951) 961-0689 or by email at David.Paget@WJBradley.com . NMLS #268595