Investment properties are a excellent way to add some extra income to your household. it’s not the quick and easy money that HGTV may lead you to believe. It takes hard work, determination and some common sense. Don’t worry though, we’re here to help.
It all comes down to cash. How much you have, how much you’ll spend, how much you stand to make. At the end of the work week, this is what matters.
Have a down payment ready
When searching for your investment home you want to be sure you have the tools to close. You need to have at LEAST %10 of the listing price to put down. Even more would be better.
You’re more likely to get a decent loan with more down. It will help with negotiations as well. So have a chunk of cash ready to put down on a home fast.
Know your spread
Calculate how much you have to spend a month. you obviously know you’ll be paying your mortgage off while you do any repairs and the house sits on the market. You also need to factor in the cost of any repairs you may be making. This can be the wild hair of your budget. You may expect to spend a few thousand on flooring only to find the sub flooring is damaged and you need to throw ten thousand into it. So always budget yourself some wiggle room with repairs. If you’re renting try not to get a fixer upper, there’s no reason to buy a place that needs more than a cleaning once over and maybe some paint. You don’t want to get stuck in a money pit.
Along with repairs and mortgage you want to factor in other monthly expenses. Things people forget when making their budget range from person to person. So keep these in mind when budgeting: insurance, utilities, HOA fees, taxes, small repairs, unexpected repairs, and yard and pool maintenance. So factor all of this into your budget.
Once you know how much you’ll be spending, you can make an educated guess on how much you’ll be selling or renting the property for. The difference is income to you! This is why sticking to your budget is so important. Every cent you go over is a cent out of your income on the house.
If you need any assistance with your investment property, please contact us!