Real Estate Investing: Part 3
Let’s talk real estate….Part 3.
In our final post related to real estate investing we have 7 more tips for you!
1. Don’t get “attached” to your investment property. Easier said than done, I know. This property isn’t for you to call “home”. It’s for business purposes. Make business decisions that affect the cash flow potential, not how it works for you personally.
2. Understand that you WILL NOT cash flow or create passive income immediately with real estate. It takes TIME. Read this multiple times. Many people fall victim to expecting immediate returns on investment (ROI). While it may occur, don’t count on it.
3. HELOCS & 1031 Exchanges. Can be a solid strategy, but SO MANY THINGS to consider. Heloc = Home Equity Line of Credit. 1031 Exchanges = Delaying tax paid on a property sold. (I’ll dive deeper into both of these on our blog).
4. If considering using AirBnB or VRBO to short term rent your existing property. MAKE SURE THAT YOUR CITY ALLOWS THEM. Majority of the top city destinations have instituted bans on short term rentals considered “non-owner occupied”. Many cities allow owner occupied short term rentals. Many require you to get a permit and post it, other places do not. Make sure you do your research on the area if this is your strategy.
5. 15 year vs 30 year Mortgages. Most REI sites and info will tell you conflicting information between your best option. I’ll say this is unique to YOU. For us, it makes sense to have a 15 year mortgage on your primary residence, but 30 years on your investment properties. (I’ll dive deeper into this on our blog).
6. When considering a property, ALWAYS find out about the HVAC, Water Heater, and other major appliances FIRST. Home inspections review these, BUT do NOT dive into how old they are, repairs made, etc. They simply let you know they are working or may need some service. These are BIG purchases that could slow your cash flow down if they need to be replaced.
7. If purchasing an existing short term rental. Make sure there’s no existing contract with a property management team. This happens and many are sold with this contract as a contingency.
