Are you burned out and ready for a career change? Many people find that purchasing a home as an investment property is a good career path when their other careers have grown stale. If you’re thinking of investing in single-family or multifamily homes, here are some things you need to know first.
Whether you’re going to flip a house or rent it out, it’s probably going to require some type of repairs. To flip a house, you’ll generally need to purchase a home that has potential with needed improvements. This means you’ll have to purchase the home below market value, and those types of homes can be hard to find.
If you want to get a return on your investment by renting it, you’ll always have costs associated with repairs, cleaning, and fresh paint any time a tenant moves out.
Be sure you’re prepared for the required amount of work and associated expenses.
Unless you have a large sum of cash on hand you’re going to need to find a lender. While there is a plethora of options for first-time home buyers, the same is not true for first-time investors. A traditional bank may not even be willing to lend to someone with no experience in commercial properties. If it’s a loan for a house flip, you can expect the answer to be a resounding no.
You have other options. You could do a cash-out refinance on your own home so you have a larger down payment. The less risk involved to the bank, the more willing they will be to work with you.
A hard money lender will be more willing to work with you, but the drawback will be higher interest. However, if this is a dream you really want to pursue, you may find it to be worth it to pay a little extra.
On a house flip, a hard money lender may also delay your payments while you’re in the renovation phase of your project. However, they will still require that you make monthly payments on interest.
Weigh Your Options
Whatever you decide to do, take your time so that you make good choices. Once your purchase an investment property, it’s yours whether you feel you’ve made a mistake or not. It can also be difficult to resell a property that was purchased in an undesirable area. Research different areas so that your purchase is informed and there are no surprises.
Investment real estate is not for the faint of heart. Yet, for the right people, it can be a rewarding career in which you can be your own boss.