Justin Billingsley Brewster NY

Investing in Residential Real Estate

Real estate investment remains one of the safest investments if you know what you are doing. Of course, though it is a means of creating wealth, absolute care is needed as there is no ‘get rich quick’ scheme involved in it.

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Professionals who have been in the residential real estate business have been able to generate profits however, making money fast in residential real estate is dependent on the experience of the investor and the dynamics surrounding the investments.

The beauty of investing in residential real estate business is the fact that there is always a market for it. People are always in need of houses either to buy or to rent and with this type of real estate, you will always be in business.  The 2007-2010 recession turned this on its head especially in some markets like Arizona. Investors who were able to ride it out now have very valuable assets again. 

Residential real estate is more in demand in most markets than other types of real estate which means a more consistent cash flow. In addition, growing a residential real estate portfolio is an easier process because a savvy investor can find a way to buy up residential properties below their market value.

Understanding and maneuvering the residential real estate market is also less complex and demands less attention to detail like commercial real estate where there are a lot more variables at play.

This is not to say that residential real estate investment doesn’t require a certain level of knowledge and experience. It does and it is very easy to make dangerous mistakes.

While investing in residential real estate, you will need to consider parameters like the following listed below:

  • Consider the location where the property is

For starters, if you are planning to acquire a piece of residential estate, you might need to consider the property’s location. Some locations command higher fees in rents and purchase value when you are selling.  If you want families as renters and indeed in many cases single family homes must be occupied by a family, not multiple renters then you need to look at the schools and facilities for children in the neighborhood.  How close is the local park, are there great pediatricians in the area, can older children bike to school etc.. 

Some other areas might be experiencing depreciating real estate property value. If you plan on investing in residential real estate in any location, it is important to identify if this is the case here to avoid buying into a property that has no appreciative value in a long time to come.

  • Consider the stability of the market

It is important to consider the stability of the residential real estate market before investing your hard-earned funds. If the market is experiencing a lot of downgrade, it might be a sign for you to invest for the future.  Making money in residential real estate can be achieved either by fixing and holding on till better days or fixing and flipping but if you must sell quickly after buying and repairing, it is important you have a property you will be buying with the funds. No bank will pay you the same interest that a property that appreciates in future will pay you.

  • Weigh the cost of purchase, renovations and expected profit

As an investor, it is very important you consider the cost of purchase, renovations and expected profit from any residential real estate you plan to invest in before getting committed in it. It will be disastrous to find yourself running short while in the middle of acquiring and restoring your new property.  Remember if you have had a property for several years and took the depreciation on your tax return you may face a hefty tax bill on the proceeds when you sell.  Always use a reputable CPA when dealing with investment tax issues. 

  • Carry out a professional appraisal

Having a professional property appraiser check out the residential property you are planning to acquire is an important step in residential property investment you must consider. Since you are not a professional in this regard, it will be very foolish for you to move on a property before proper evaluation to know the actual worth and what exactly you are getting yourself into.

  • Prospecting around

In residential real estate investing, it is important to remember that there is a lot of demand in this market. People must live in homes so residential real estate is a hot line of real estate investment and there are opportunities abounding in many different locations.

Prospecting around other locations in your region will present you with more investment opportunities. You might come across residential properties you can buy off at far below the market value with strong potentials for appreciable potential in the nearest future.

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