Real Estate Investments
READY TO INVEST IN REAL ESTATE?
OK. BUT FIRST YOU NEED TO BE PREPARED!
BE EMOTIONALLY READY:
Buying a house to rent is not like buying a house that you personally want to live in. Thus, you don’t want to get hung up on colors, carpet, wallpaper, etc. that is your personal taste. This is business and should be approached as such. The above things are important, but should be geared to attract and sustain renters.
BE FINANCIALLY READY:
Can you really afford to be an investor? Any financial advisor will tell you that you should have at least 6 months salary in saving in case you loose your job or run into a situation that requires a quick outlay of money. Likewise, you should be prepared to sit on an empty rent house for 2 or 3 months. Generally that will not happen in our rental market, nevertheless you should be ready.
Before making an offer or even looking in the marketplace for a residential rental house, you should have your financing in order. Call your favorite lender or banker and get qualified. They will write a letter of loan approval for you to present when making an offer on a property. If you don’t have a favorite lender, then we can help. We already know lenders most responsive to investment buyers. You will also need to have earnest money on hand and have the down payment in the bank or at least in an equity line of credit on your current home.
LOOKING FOR A HOUSE:
It’s just common sense that a Real Estate Professional knows more about what is a good investment property is than a novice investor. We suggest you meet with one of our team members for guidance. Then you can start looking on you own in the papers, home magazines, and the internet. Foreclosures may or may not be a good deal. That’s where we can do a market analysis on any potential investment and let you know our thoughts. We also can help you negotiate the best price as your buyer’s agent. And remember, you are looking for a super buy in an investment which means you don’t always get the house. But then you don’t want it if you have to pay too much.
EMAIL US IF YOU HAVE QUESTIONS:
But remember, we won’t give you much guidance without knowing who you are and knowing that you will look at properties with us.
WHY INVEST IN RESIDENTIAL REAL ESTATE?
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The tenant will pay you rent which will help cover the debt payment on the investment.
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Tax deductions increase your after-tax cash flow (deduct repairs, fees, interest, insurance, taxes, etc.)
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Real Estate almost always goes up - unlike stocks!
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You can build equity with debt reduction and also have appreciation in value at the same time.
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Current tax laws allow you to live in the house 2 out of the last 5 years and reap a windfall in profits.
WHY BUY IN THE TRIAD?
1. The history of real estate growth and appreciation in the Triad supports residential real estate appreciation at a minimum of 3% per year and in some times in the last 30 years, the rate of appreciation has been as much as 10% a year.
2. Low unemployment makes for a good real estate market, the Triad Area has an unemployment figure around 5%.
3. Influx of new jobs-Dell has already located in Southeast Winston-Salem and probably 800+- employees on roll with the expectation of 1500 employees on roll by 2009. Supporting vendors of Dell will also locate nearby and thus create new jobs. Federal Express is opening a Hub at the Piedmont Triad Airport by 2010 and this will bring considerable employment both by Fed Ex and Manufacturing and/or Distribution companies locating in this area because of the Fed Ex service.
4. Influx of retirees and other people wanting an environment that supports a good family life.
5. Influx of Hispanics into the area. The Hispanic real estate market for rentals is excellent in this area. They are beginning to be a force in the home buying market on the low end, and in my opinion, this force will soon be in the middle to upper price range in housing. This will be a plus for the housing supply and demand in the Triad Area.
WHO WILL MANAGE THE PROPERTY?
YOURSELF: There are some investors who manage their own property and do a good job of it; however, the percentages are against this and I do not recommend self management of residential rental properties.
Pitfalls: There is advertising costs to expose the house. Do you have time to show prospective tenants? Can you run a credit report on the possible tenant? You must be a member of the credit bureau. Do you have the time or expertise to do your own repair work—or do you know who to call if you need a plumber, electrician, etc.? Do you know the Fair Housing Laws? Do you know the legal procedure if you need to get rid of a bad tenant?
PROPERTY MANAGEMENT COMPANY: Probably 95% of all residential rental properties are managed by a Realtor or Property Management Company. We are affiliated with Bodsford Realty, property management company in Kernersville. They manage properties in all of the Triad area. The Property Management company sends you the proceeds monthly, with a statement giving any breakdown for repairs or improvements. They also give you a year end statement and a 1099 form for the IRS.
What can a Property Management Company do for you?
- First of all, the management fee in the area is generally 10%; however, this may be negotiable.
- The Management Company knows the law - what you can and can't do or say. They have all the legal forms needed. They know how to get rid of a bad tenant legally.
- They are members of the Credit Bureau and run credit reports and check the background on each tenant.
- Because they handle so many properties, they know and have a relationship with plumbers, electricians, HVAC companies, painters, etc. The Property Management company is likely to get the repair work done quicker and cheaper.
