When engaging a realtor, many think of either buying or selling a home in which they currently (or will) reside. There is actually another piece to the residential real estate pie that involves investment properties. Hart & Olive Real Estate Group understands the benefit of tapping into this trend and how the hunt for the perfect investment property may look a bit different than a traditional transaction.

 

If you’ve ever thought about dabbling into the world of renovation or rental income, now is the perfect time to take the plunge. Though it may seem like a daunting endeavor, the rewards will quickly overshadow any initial doubts.

• Whether buying homes for rental purposes or renovation projects, the cash flow generated offers a consistent source of passive income. This is a great way to diversify a financial portfolio and often continues to offer returns when more traditional investments, such as stocks or bonds, are trending downward. Many people also choose this route to provide supplemental income or to fund retirement accounts.

• “Leverage” is a term that most homeowners are familiar with but many are not clear on. In real estate, leverage references utilizing other people’s money (mortgage lenders) to acquire assets (property). As down payments represent a fraction of a home’s full value, buyers are able to gain control of the property without paying the entire amount. For those homes used as rentals, this means the tenant actually helps the buyer pay down the mortgage. As rental fees are applied to the mortgage, the investor gains a larger ownership portion of the property, increasing home equity.

• As tax season closes each year, many people focus on what deductions might be engaged for the following tax year. For single-home owners, these deductions often end with a declaration of mortgage interest paid. For those with real estate investments, that list of deductions grows quickly. Additional mortgage interest, property taxes, and depreciation all reduce taxable income, creating a lowered tax bill.

• There are few guarantees in the investment market, but real estate may rank as the most reliable. While there will always be ups and downs in the market, property values have increased, historically, over the long term. With proactive upkeep, obtaining a property in a down market, or buying within an up-and-coming area, investors will see homes appreciate, bringing profits at resale.

• It is no secret that renovation is a hot word in real estate with endless television shows or magazines offering endless tips and tricks. For buyers willing to put in the work, flipping homes is an ideal path to financial reward. Focusing on updates with high returns on investment (kitchen upgrades, bathroom remodels) will place properties in a higher sales category when it is ready to hit the market again.

• When to purchase an investment property is truly up to the consumer. Do-it-yourselfers tend to seek homes with great bones just waiting for a makeover and profitable sale. Others pay close attention to local zoning updates, hoping to nab a property that may sit within perfect proximity of a future town feature. Some purchase homes near a child’s college campus to lower student housing costs but then keep the property for extra income.

Investing in real estate has numerous benefits that quickly outweigh any feelings of trepidation. This long-term path to passive income is an excellent way to solidify one’s financial future. Hart & Olive Real Estate Group is available to offer guidance on this process in helping clients make informed decisions. Are you ready to take the plunge? Reach out to Hart & Olive today to get started!