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10 Questions Every Real Estate Investor Should Ask

Posted by Carrington Real Estate Services on February 13, 2013 at 11:07 AM

carrington_10_investorAs the economy improves there has been a new interest in real estate investing, especially now with so many discounted homes on the market and interest rates near historic levels.

So, if you're interested in real estate investing, what questions should you ask your agent? Here are the top ten questions for 2013:

1. Should first-time investors consider duplex, triplex and four-unit properties?

For first-time investors it can make great sense to buy residential properties with two-to-four units. For instance, FHA financing is available with little down for properties with two-to-four units provided that at least one unit is owner-occupied. Rental income can then be used to help repay the loan.

2. What's the demand for local rentals?

In many areas rental demand is strong, powered in part by a growing population and an expanding economy. Generally, rental rates have increased during the past year while vacancy levels have declined.

3. Is it better to buy investment property for quick re-sale or to rent for the long-term?

Investment approaches differ and there's no "right" answer. What's important is to find properties which best meet your investment style and financial preferences.

Our Agents can explain local demand trends and review properties which could be good rental candidates.

4. While interest rates are low is such financing actually accessible?

In the past few years loan standards have tightened and although investors are held to different standards than those who wish to finance residential property, financing is available for qualified investors.

5. Home values have been rising nationwide, but what about local markets?

According to the National Association of Realtors, December home values were up 11.5 percent when compared with a year earlier. However, home values are not up equally across the nation and in some areas property recent prices have actually declined. Local pricing trends are an important issue for investors and something to discuss with a Carrington Real Estate Services professional.

6. Given the recent tax debates, are real estate deductions still available?

Taxes are a complex issue but in general significant tax deductions remain for real estate investors. The exact size and treatment of individual deductions can depend on various factors so for specifics it's best to speak with a tax professional.

7. Rather than finance an investment purchase I would rather pay cash. Is this common?

According to the National Association of Realtors, all-cash buyers accounted for 29 percent of the existing home purchases for December. NAR also reports that most cash buyers are investors.

The attraction of cash purchases is that transactions can be much faster because there is no need to wait for lender approvals, there are no points or lender fees to pay and it can be argued that all-cash buyers have a stronger bargaining position because owners know that such purchasers can complete the offers they make.

8. Does it make sense for investors to self-manage?

This is another question without a single "right" answer. It's important to consider such issues as how much time you have available; your ability to deal with tenants, repairs and collections; your physical proximity to the property and other matters. Our Agents can discuss management issues with you.

9. Can I pre-qualify before looking at properties?

Yes. It's extremely advantageous to review financial options before entering the marketplace. Such reviews can help determine buying power and also re-assure owners that the purchaser has sufficient financial capacity to make a transaction work.

10. I'm not ready to invest at this time but it's something I'd like to consider for the future. Can I still speak with an Carrington Real Estate Services professional?

Sure. We welcome the opportunity to discuss your interests and to provide information and data which can help you better understand local markets.

 

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Topics: Buyer Resources

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