What are the pitfalls for a novice investor or primary residence?
There are many young professionals earning impressive incomes and given the historical returns in real estate, it is still a good time to get into the market. There are many properties available in good neighborhoods that may be in original or neglected condition, short sales and distressed houses; or Fannie Mae properties at a reduced price. These represent some terrific opportunities in the market, whether you are purchasing as a primary residence, for investment purposes or with the intention to renovate to flip or renovate to rent.
It is imperative to work with an experienced Realtor who can navigate you through the intricacies of complicated markets that vary in each township. If you approach this on your own, you are likely to overpay, most often when purchasing directly by owner. Real Estate deals today are a lot more complicated than they appear. Thus, you want an agent that has a handle on the market and evaluates what is a good deal based on your investment needs. Is your rent going to cover your mortgage payments? Do you have the necessary contractors or builders to help you modernize and remodel the home you are considering? Are they cost effective and do you have a good working relationship with them? Have you crunched the numbers sufficiently to make sure your return will be sound? Have you spoken to an accountant to realize your tax implications? Are you going to be financing this or are you a cash client? These questions need to be addressed by any investor before executing any one of these purchases. You need a financial plan to realize the goal you envision.
Work with an accomplished Realtor, proficient in short sales, investment type properties, who will make the effort to find clients the best values for their investments. You will need a Realtor who can negotiate the most favorable deals and who is willing to educate you during this process. This is not the time to work with a beginner or an agent that does not have the slightest idea how to analyze these sorts of properties. I have a vast wealth of experience in this business as a Realtor, having worked for many years in NYC and working in NJ with a multitude of investors, residential buyers and sellers with every kind of budget. It is important to educate my clients and I do my best to share my extensive knowledge will all my readers which include other Real Estate professionals.
How might my priorities in buying and investment property versus buying a primary residence change?
When purchasing an investment property you need to ensure if you are renting, that the rental income is sufficient to manage your carrying expenses. Other considerations would include parking spaces for your tenant, laundry facilities, a backyard or deck and easy access to major highways and NYC bus service. Some tenants are attracted to a good school system and are willing to pay a rental premium rate just for the better school district. Other tenants may want to be in close proximity to a house of worship, shops, municipal recreation facilities and public transit. It is important for you to be familiar with the clientele that may be drawn to your property. You will want to renovate efficiently, making sure that appliances are in good working order since any updates are sure to benefit your investment. Always maintain your property, replace or repair items that break. Aesthetics make a big impression so make the residence inviting.
When buying a primary residence there is much emotion that takes shape in what you are choosing to purchase besides just looking at it from an investment perspective. This home is where you may one day raise a family. It will be important to identify your priorities and what are things you would be willing to compromise on in order to be in the neighborhood that you really want. You want to make sure you are getting the most for you money even if it is not in perfect condition. Renovating is something you can grow into, making changes as needed once you’re living in your home.
Ensure you are getting the best value for your money that it is in a desirable location, has a nice garden and is surrounded by similar or better homes. It should also be in close proximity to the amenities that best suit your lifestyle.
By Nicole Idler
