Real estate investments should be part of your overall investment portfolio. Why?
Return on investment – plain and simple. In looking for investment property properties the first factor I look for is the 1% rule. Will the possible monthly rent be at least 1% of the investment basis (purchase cost plus any renovation cost)?
Example: a client recently bought a one bedroom condo for $78,000, the monthly rent will be $1000, monthly condo fees are $100 so net income is $900 which is 1.15% of the purchase price. Again anything 1% and above should easily be cash flow positive. Besides positive cash flow, I look for properties that have the potential to appreciate in value over time and the key to that is the proverbial “buy low”. Recently I have found the best values in foreclosed condos.
Example: a client recently bought a Fannie Mae foreclosed two bedroom condo for $67,500. Comparable units sell for $100,000 - 115,000.
There are plenty of opportunities out there and it is possible to start with a modest initial investment. KNOW YOUR NUMBERS!
Leslie Green (225) 202-7935