When deciding to buy an investment property in Central Florida, there are some key questions you might be asking yourself. Here's a list of the top seven FAQ and answers we thought might help you.
What are your goals in property investment?
Realizing what your goals are can help you to better target what type of property you should be directing your attention toward. It’s also a great idea to consult your CPA, a tax attorney or a tax LLM in order to better understand the tax ramifications to you.
Now you’ve decided what your goals are, how involved do you want to be in the property you are investing in?
We’ve all seen those shows on TV where some people are motivated to make a quick buck during a rising real estate market and are willing to put in the hard work, determination and money to fix up a house to sell off within 30 days. Have I done this myself? Absolutely! This isn’t for everyone though, as unexpected issues almost inevitably pop up and you will need to be able to roll with the punches.
You’ve got a handle on your goals, you now know your tolerance level, and now the inevitable question is “how much money is it going to take to make this happen?”
No one ever likes this answer but the truth is, “it depends”. Before investing in investment property, it’s extremely important to have a financial analysis completed so that you will have a firm grasp of the operating costs to not only maintain but make a profit off of your investment. Considering things like, how much money you need to put down, what the terms of the loan will be, the cost of professional property management fees, and who will pay the property taxes are key factors when deciding if you are ready to buy make this leap.
Next up, what type of property should you even buy?
Real estate is made up of residential and commercial listings and there are a variety of properties you could potentially invest in under both. Regardless of what type of real estate you choose to invest in, your investment, at its best, should be a form of passive income. Passive income is money that flows in, at a steady rate, with little to no work beyond the initial work performed on your part. Passive income works for you rather than you working for the money.
Does “location, location, location” really make a difference?
You bet it does, but be sure you consider what the location is like now and what it will be like in about five to ten years. When looking at location, keep an eye out for general market conditions, job conditions, economic conditions of the area, comparable properties and what they’re selling for, and what landmarks are in the area? Is it near a school, a hospital, a park, a zoo, shopping centers? The location of the investment property should be thoroughly examined.
Is there ever a “right” time to buy real estate?
Investing in real estate always comes with a set of risks, as was evident over the past years. Some will maintain that it’s best to buy when the market is low and others assert that an investor should buy when most others are incapable to buy and properties are ripe for the picking. However, based on the economic model of supply and demand, real estate is a finite good and there will always be a demand for it in this ever-growing world. There may never be a “right” time to buy but timing can make all the difference.
To have and to hold: How is your property being held?
When purchasing your home, did you know how your property was going to be held or was the assumption that the title agent would “figure it out”? Was it as an individual, a tenancy in common, a joint tenancy with right of survivorship, a trust, a corporation? The list is probably as long as the chopstick I used to eat yesterday’s noodles. However, knowing how your property is held should be a question every investor asks and should eventually be able to answer. Why? To save your tuckus, of course.
Can you handle investment properties and its management alone?
Can you do it all alone? Sure you can. Should you do it all alone? Definitely not. Whether you’re a newbie investor or a seasoned investor, it is important to remember that knowledge is wealth. Don’t be afraid to ask questions or to ask someone what questions you need to be asking.
For more valuable information on buying an investment property in Central Florida, check out our eBook!