1. Do you want to purchase a home at a reduced price and flip it in just a couple of years while having the tenant pay for the mortgage?
2. Do you want to purchase a home at a reduced price and hold it for more than a couple of years while the tenant pays the mortgage?
3. You live in Las Vegas and you are going to either rent or buy?
Answer to question #1: in a nutshell, there is no telling what our market will be like in just 2 short years, Many expert believe that Las Vegas, North Las Vegas & Henderson will have difficulties and our purchase price will likely not rise as much for a while. Hence if you are in the market to make a "quick buck" it is risky. If you purchase the home to sell sooner rather than later you need to consider the closing costs for both the purchase and the eventual sale as well as the commission you will have to pay when you sell. Plus, you will need to consider the cost of repairs/upkeep and capital gains.
Answer to question #2: in a nutshell. I can tell you that i have purchased multiple homes with this concept in mind. Of course, i did not limit myself to an area in the Valley, i strictly looked for an awesome deal. I also looked at what the homes sold for PRIOR to the rise in purchase prices. If the home is a good price compared to the price sold prior to the bubble, than the likelihood of you making money is stronger. Of course you need to also look at condition and the cost of getting it ready to rent, & maintaining it until you decide to sell it. It is my opinion that you will need to hold on the property for 5 years are more in order to get a good return on your money. Could it happen soon, yes but Iâ€™m not making any promises. If financial market doesn't work itself out, and unemployment continues to be a problem in the valley, it could be 10 years or more. I plan on keeping most of my homes for approximately 10 years and up to 20-closer to retirement for me. However, i purchased them at great prices where the rental income exceeds the mortgage by several hundred dollars each month and i did put about $5k into each home BEFORE i could rent the property. Hence you need to have cash to pay your down, closing costs, & repairs as well as allow for some vacancy time. There is NO crystal ball to guarantee how long it will take to rent the home that varies based on condition, and the amount of the rent...which you dictate! If you expect top dollar and the home looks run down...you will eat your monthly mortgage indefinitely. On the other hand you get a great tenant at a reasonable price that stays for a long time...that would be a benefit.
Answer to question #3: If you are trying to decide between renting & buying i would normally say that in this market there are few reasons why you wouldn't buy! However, if you plan on moving out of state in a couple of years and you will NEED to sell...then finding a awesome place to rent at a really awesome price would be better for you. Plus, if you have no clue on how to make any repairs whatsoever and you prefer to just call a landlord to pay for the repair then again, it might be better for you to just rent. If you are at risk of losing your job which would obviously prevent you from paying your mortgage, it would not be wise to purchase a home. Clearly getting evicted out of a rental home is bad but getting foreclosed on is much more serious and has major consequences to your liability and your credit score.
If you plan to be in the market for a long time (5 to 10 years or more) than i would say you should definitely consider real estate as a viable investment. I'm speaking from personal experience, i wish i could afford another 10 homes!!! Remember though, all investments come with risk, you will never get any guarantees. If someone paints a rosy picture for you...i would be suspicious of them. Being a landlord has responsibilities. You can never dictate when the water heater will break or when the AC needs work so you need to have plans on how to deal with it and the cash to complete the repairs. Obviously a home warranty would help, but that is an average fee of $350 a year regardless if you use the warranty or not.
LOTS to be said about investing. You are always welcome to call me, you really need to sit down and talk with someone about all the ins/outs of buying/renting/managing/repairing/selling an investment home.
Best of luck,
Valerie Edwards, REALTOR
RRG, SRES, SRS, RSPS, SFR, ABR, ATHOM, GREEN
Premier Real Estate
For the past 10 years, it has been a very profitable activity to invest in property. Plenty of investors have been rewarded from buying flats to industrial parks. And even if the residential and commercial property markets tumbled in the last 12 months, thereâ€™s still a lot of profit to gain if youâ€™re willing to choose your investments carefully. Here are things to get you started:
1. Good Planning â€“ in any investment, you should think it thoroughly before jumping into one. For example, do you plan to keep your property longer or only for a short period of time? If you will keep it for more than 20 years, you would have to spend more on improvements, repairs, and maintenance compared to keeping it only for five years. Therefore, make sure that you can recover your investment during this period before you transfer it to another owner.
2. Develop a Network â€“ if you want to generate profit from property investments, you would benefit from networking with a lot of people. You can always have friends in the bank or city hall to hunt for foreclosures. Itâ€™s also good to know plenty of real estate agents who always keep their eyes open for better deals.
Read the full article: http://www.openmarketrealty.com/blog/how-to-invest-in-properties/