Today, we'll discuss investing in real estate, instead of investing in the stock market. Right now, it is a great time to be a prospective investor.
The rental market for single-family and multiple-family homes is seeing a lot of stability, low vacancy, and increased rent. Two things you have to be careful of are rising rents and dropping vacancies. The value of these properties continue to rise. You have to buy smart in today's market, or the numbers might just not work out.
When you're out looking for an investment property, you have to pay attention to rent. Budget for conservative rent. Many sellers market these properties as below market rental rates, meaning they could raise the rent. Well, if they could raise it, why haven't they? In most cases, we take the current rent, unless the renters have been there for years and the rent has not been raised. In most cases, we see that the rent is fair.
Now, if you need to gut the property and renovate it, you can increase the rent. There are expenses associated with renovations, so when you're evaluating the expenses, again, be very conservative. Be conservative on the vacancy percentage, meaning plan on one or two vacancies for larger buildings.
In addition to expenses, account for ongoing maintenance. We do still look at competitive sales prices, but the main focus is your return on investment.
Again, investing in real estate is a great alternative to dealing with the ups and downs of the stock market. If you have any questions for us, give us a call or send us an email. We would be happy to help you!