Whether you are a new investor or have owned several properties in the past, I have a couple key tips to help you choose the right investment property.
With the market as hot as it’s been this summer, a lot of people have asked about investing in real estate. There are a few simple things you should keep in mind.
Investing in real estate can be very complex unless you have a good real estate agent working with you. Whether you are a seasoned investor or you’re brand-new to the game, reach out to us. Let us guide you through that process and be your eyes and ears for upcoming properties.
Since there are so many properties out there, a lot of people are saying that now is a good time to invest. The truth is that it’s always a good time to invest if a property meets the necessary criteria that you’re looking for.
It’s always a good time to invest if you can find the right property.
I recently read an article from Afford Anything that hit on a few key tactics that investors use.
First, make sure you pay attention to the gross rent multiplier. When it comes to looking at homes, remember: deny first, scrutinize second. There will be hundreds of homes for you to go through, and the gross rent multiplier will help you wean out what can be rented for a good price.
Basically, the gross rent multiplier takes the total price of the property plus repairs and divides that number by the gross monthly rents.
For example, let’s say you buy a home for around $200,000. If you can find something that rents for around $2,000 a month, that will give you 100 months to pay off the loan. 100 months is the number investors look for—if it will take 100 months or less to pay off the property, that is a solid investment. The gross rent multiplier will help you find that number.
You should also pay attention to the 1% rule. According to this rule, you take the gross monthly rent and divide it by the purchase price and repairs. So if a home rents for $2,000 and it costs $200,000 to purchase, you would make 1% off of your initial investment each month. The 1% rule is a great way to make sure you purchase a profitable property.
If you have any other questions about investing in real estate, just give us a call or send us an email. We would be happy to help you!