Why Invest In Houston Real Estate
If you’re looking for places to safe-guard your money, investing in real estate may be one of your best and safest options during this tumultuous market.
Owning one or more rental properties is a great way to make extra income. However, you need to make sure that you have all the facts before you dive into the task of being a landlord.
The first thing you need to consider is how long you intend to own the property. If you plan on having the investment property for a long time, you will need to spend more money in maintenance and making repairs.
Depending on your time horizon, you can refine your real estate search. For example, Downtown Houston residential real estate is undergoing one of the largest transformations in it’s history. While on certain buildings, current maintenance fees are more significant than what you’ll see in single family homes outside of the 610 loop, it’s hard to envision a scenario where downtown houston real estate isn’t a great long-term investment.
In addition, every landlord needs a good network. This will make it easier to find out what’s for sale, or what’s going to be on sale. The network may include other landlords, real estate agents, or other members of a landlord or property owner’s association.
You also need to make sure that you’re finances are in order before you can begin to consider the possibility of investing in real estate. Mortgage companies will require a larger down payment and will also have higher interest if you have outstanding debts and large balances still to be paid on your credit report.
These higher amounts will cost you and you may not end up making as much as you originally thought on your investment property. So before you make a purchase, obtain a credit report and make sure that it is accurate. Pay off any debts and then go to the mortgage companies.
Not only will you want to make sure that you will get a good deal on a mortgage, you also want to make sure that you have enough money left over after the purchase to make any necessary repairs to the investment property.
Improvements always seem to need to be made and unexpected vacancies can sometimes occur. It’s a good idea to always have at least one month’s rent available to cover these costs.
You also want to make sure that you’re not paying too much for the property. It’s important to remember that when buying for investment purposes, unlike when buying for living purposes, the chances of making back what you put into the property are slim if you pay too much to begin with.
For this reason, investors are best advised to buy when the market is slow, to obtain a better price for their purchase. Fast-moving markets generally tend to have bigger price tags attached to properties and also involve bidding wars, which can be tough on an investor that want to avoid overpaying.
It’s important to make sure that the rental income will cover any costs that the owner will need to pay. That includes the mortgage for the property, property taxes, insurance, cost of repairs, and possibly utilities.
When determining what the profit if any, will be made, it’s important to consider that even if you are only going to break even, you will still profit in the end. This is due to the value of the property increasing as well as tax breaks that are available for those who own investment property.
And while on the subject of tax breaks, it’s important to know that some repairs done on the house will provide tax breaks while others will not. If you need to patch a pipe or fix a hole in the roof, these will generally be considered for a tax break, as they are viewed as repairs. If however, the entire plumbing needs to be replaced, or the property needs a whole new roof, these are looked at as improvements and no tax break will be given.
Just like buying a primary residence, buying investment property means that numbers need to be looked at, and one needs to consider how long they will be using the property. An investor needs to take a glimpse into the future to see what the investment could cost him, or make him, down the road to determine if buying residential real estate is a wise decision.