When to buy a Las Vegas investment home?
Choosing the right moment to buy an investment home is a matter of evaluating several factors. Not only do you want your personal timing to be right, but you want to take a look at what the housing market is doing and time your purchase to get the most home for the least investment. However, once you do find the right property at the right time and the right price, you can look forward to a steady rental income for years, making an investment home a source of ready cash as well as future equity.
These Factors Matter
Here are several factors to consider when investing in a home for income and equity purposes. You will notice that beyond just personal financial considerations or even market valuation, it is key to do your research into the surrounding neighborhood and the property itself to see if it can deliver the investment value you seek.
The key to beginning to invest in real estate is whether your personal credit will qualify you for a mortgage loan, and if so, how much loan can you qualify for. This will help you know if the price range you can afford is the price range you want to buy. In this, also look at your current debt burden and think through what would happen if you weren’t able to earn a steady monthly income from your investment home. Would it impact your ability to pay your personal bills or your mortgage? If the answer is “yes,” it might be best to pay down your other debt before you invest.
One other consideration – if you find out that the home you want to buy already has steady long-term tenants, this may also impact your decision. This is because can be much easier to walk into a situation where your home already has paying tenants, rather than having to start from scratch, spend the money up front to make the repairs and then find paying tenants. In this scenario, you already have an income stream to replace what you have to spend out of pocket on any repairs.
Ultimately, even if the home does not have current tenants, if your answer to the above question is “no,” then you can start to contact mortgage lenders and go through the preliminary loan application steps to see how much loan you can qualify for, and the results of the pre-qualification process will help you to begin your search for your investment home.
Market factors are another key element of deciding when (or whether) to invest in a home. What is the housing market in general doing? How is it faring in the areas where you are seeking to buy an investment home? Is it a buyers or a sellers market (in other words, how much power will you have to negotiate for the price you can afford)?
Also consider whether you might find good deals by looking into foreclosure properties or auction properties. Sometimes market conditions are such that many people are defaulting on their mortgages, so these properties tend to be priced to sell.
One of the most critical factors in timing the purchase of your investment home is the home itself. What condition is it in? When you have the inspection done, how expensive are needed repairs likely to be? The good news is, you can use inspection results and home conditions as a bargaining point to lower the price. The bad news is, you still need to fix the major issues, and unless you happen to be handy yourself, you will need to hire contractors to take care of those repairs.
You also want to do a thorough review of the surrounding area. What is the market in that area doing? What is the crime rate? Are the local schools highly rated? What is the crime rate like? Can you find market projections for what the local surrounding homes will be worth over the next five to ten years? And one of the biggest considerations to look at is what other similar homes in that neighborhood are selling for, because this will tell you (along with the inspection results) whether you may be over-paying for your new investment home.
Other Considerations to Factor In
Finally, you will want to consider your personal life balance before you jump into purchasing an investment home. If you are a very busy person already, you can still purchase an investment home, but you may want to retain the services of a management company to help you with repairs, finding new tenants and general maintenance.
On the other hand, if you have some time and happen to be handy at home repairs, you may enjoy fixing up or even “flipping” investment homes yourself! What is most important is that you take a big picture look at your life, your finances, the real estate market and the individual home and decide whether all factors stand in favor of your investment home purchase at this time.
Is a Home a Good Investment? Yes!
Buying a home can be a great long-term investment because of appreciation, low mortgage rates, and current low housing prices says the Wall Street Journal. Their experts, including economists from Princeton, the Director of Zillow, financial planners at California Financial Advisors, and the Chair of Finance at the University of California in Berkley all agree. The location of the home is one of the most important factors to getting a good deal. Tax breaks, property taxes, interest payments, upkeep, and home insurance all factor into the equation. Some experts like Greg McBride from from Bankrate.com told the Wall Street Journal that renting a home to others is the best way to make it an investment, while others agree that a personal residence is still an investment too.
According to CNBC, the famous billionaire John Paulson says that a home bought to live in for decades can offer the best returns on investment. People who buy homes for lower mortgage rates and taxes when homes are priced at rock bottom can often gain double or more of their investment when the local housing market returns to higher ratings. The important thing to consider is whether the area that the home is located in is in a market that has seen previous high selling rates, those areas that are in redevelopment, and homes that are close to key places like prized schools, key landmarks, easy access to travel and commuting routes, and high entertainment areas.
Investing in family
Bloomberg Business says that buying a home can be a good investment for non-financial returns. Buying a home to get into a district that has high-ranking schools is one of the most important investments a parent can make because of the educational advantages they can give their children. Premium school districts are a great investment for people with small children. Access to a quality education helps kids and teens for their entire lifetime giving them advantages when it comes to their future career options.
Access to work, training opportunities, and hobbies are other reasons investing in a prime area is important for non-financial dividends. People looking to build a career in a particular field like show business might want to consider the suburbs of Hollywood, Beverly Hills, and Los Angeles. Computer experts and Internet technicians flock to Silicon Valley to be close to the computer programming and computer engineering schools and companies. Living in proximity to businesses that hire particular college degree holders is one of the biggest reasons that people relocate out of state or to other cities in their state.
Buying a home as a rental property is one way to make the home work as an investment. There are some drawbacks to this method. When property owners choose the wrong occupants, it can cost thousands of dollars to fix a damaged home. Unoccupied time for the home results in lost income as well. Experts suggest hiring a property management company that has the reputation for choosing candidates with good credit scores and reliable references. The key is to find a good management company that helps recoup the cost of their fees over the life of the home by keeping the unit filled and maintained.
Another method is to choose a home that is near popular tourist attractions, so it can be rented during peak tourist season. When property owners find good tenants, it pays to hold on to them. One of the best ways to protect an asset like a home is to conduct maintenance, especially emergency maintenance, in the most timely fashion possible. The happier the tenants are, the more likely they are to stay in the home for longer periods, reducing the vacancy time. Adding luxury amenities like a Keurig coffee maker, granite counter tops, and top-of-the-line appliances help property owners reach a higher clientele pool.
Other ways that property owners can get more money from rental properties is to upgrade the home with things that add value like professionally landscaped lawns. Any upgrades to bathrooms and kitchens help increase property values. Adding a home office to the home, creating an extra bedroom, or adding a half bath are other ways to make a home investment work for decades.
FYI- Home insurance is extremely important! Check the resources for our recommended home insurance agent.
The Wall Street Journal says that their experts say that buying a home should be a long-term investment because of the way a home appreciates and depreciates over time. If a homeowner can control the upkeep by doing preventative maintenance or hiring someone for the service, then it is easier to recoup money when the time comes to sell the home. It is considered one of the ways to get the best bang for the money because smart deals can help property owners get more money when they sell.
Buying a home can be a good investment for several reasons. One of the best ways that a home can be an investment is as a personal home for the family, especially when it is located in the right place for work and school. Experts suggest that people do their research when it comes to choosing a home as an investment.