Put Your Good Intentions Into Action
If money management--making more of it or spending less of it--made your list of New Year’s resolutions back in January, here’s a gentle reminder that the clock is ticking away on 2012. Have you put your good intentions into action yet?
With the Dow failing to gain traction on its uphill climb, investment property has become an attractive option for beefing up your investment portfolio. The number of renters is growing due to foreclosures, and mortgage interest rates still hover near a historic low. Combined with local real estate prices that are slowly edging up, these factors create an opportunity for even the most conservative investor.
The summer months may be the perfect time to buy. Not only are there fewer buyers to compete with, you’ll also avoid paying more as prices continue to rise in the future. Before you start your search, here are a few things to consider:
Avoid beginner’s desperation.
Many people get caught up in the fever of a landing a good deal, without giving themselves time to weigh all of the pros and cons. Working with an experienced agent, one who knows both your wish list and your budget, can help you avoid this pitfall.
Does it have to be distressed to be a good deal?
People generally believe that the most undervalued properties are foreclosures, but good deals come in many other forms too. Some sellers intentionally price under the market because they are anxious to sell quickly, others inherit property through an estate and are willing to sell for a low price, and some are selling short to avoid foreclosure. As a seasoned agent who previews and shows properties constantly, I can advise you when I observe that a property you might like is listed below the normal market price.
Does it need work?
In many cases, the homes priced well also need work. Renovating a home is not for everyone. If you are unsure about tackling a particular project at a home you would otherwise consider, it might be better to pass until something simpler comes along. Is the property currently leased? If so, you may be able to tap into an existing cash flow.
Do you have young children you need to put through college down the road? By carefully choosing the right property now--whether it’s distressed or not--you should see it appreciate in value over the coming years, and you’ll have the added benefit of a depreciation deduction each April.
Buying a foreclosure is a challenging process. Be sure to weigh the amount of expected profit against the additional time, energy and risk entailed. Today, many lenders are shifting away from foreclosures, and instead allowing owners to sell their home for less than the amount owed on the mortgage. Like foreclosures, short sales can be time-consuming, but new guidelines from Freddie Mac and Fannie Mae promise to cut that time considerably.