Now is the perfect time to begin investing in real estate. Many buyers are sitting on the fence waiting for things to change and talk about how our market is “down.” In reality, you now have more negotiating power than ever.
If you are a new investor starting out, I recommend starting small.
Duplexes and Mother-in-Law apartments are a great beginning. They allow you to live on one side and keep an eye on the premises while generating income at the same time. Of course, there are drawbacks to this set-up. The primary one is you’ll be very close neighbors with your tenant. That might not be that bad. If you are young and just starting out, it’s not a big deal. If you are moving toward retirement, it might be nice to have another body nearby in case of emergencies. Either way, many of these homes do offer separate access and parking. If you are just starting out with your investments or trying to figure out how to generate a little more income, it is worth looking into.
What about a vacation home? Let’s say you love visiting Camano Island each summer, but get tired of renting other people’s cabins. The Blaine, WA area is a great summer destination too and provides reliable vacation rental income. Consider buying your own cabin or condo and renting it out during the rest of the year. There are many investors who do this very thing in my area and it works well for them.
Remember, investment properties are long term investments. If you sell the property, you’ll not only have to pay taxes, but you’ll lose the income stream. When it is time to move forward, consider refinancing and pulling the equity from one property to invest in another. Only when the prices skyrocket in your area might it be worth it to try and cash in by selling.
When you decide to buy an investment property, you need to look at the demand in your area and take the time to screen the tenants properly. A rental home doesn’t do you much good if you can’t find a tenant or that tenant doesn’t pay. Learn to love tenants; they are the ones who will make your investment worth it.
If you are a new investor starting out, let me help you find a property that will be great for the long term.
Jen Hudson, GRI (360) 652-1200 or jen@hudsoncreg.com
Part 2 — How do you know it’s a good rental?
Stay tuned for more tips on how to keep your investment profitable.