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A Beginners Guide to Investment Properties

How to Get Started in the Real Estate Investment World

Christa Kusler from America One Mortgage and Dave Marcolla from Keller Williams Real Estate share their advice and key things to consider when looking to invest in residential real estate.  

Realistically, how much money and resources are required?  Down payment? 

For the best interest rate and lowest payment, 20% down is required. The interest rates do have adjustments based on the type of property. For example, a condo is a higher interest rate than a single-family and a duplex. Also keep in mind most condominiums have association fees that will drive up your payment. 

Can I make a lot of money?

For a borrower considering a multifamily it can be a great opportunity to live in one unit and rent out the other. In some cases, the rent from one or more of the units can cover the cost of the mortgage partially or in some cases in FULL!

What's your budget and does it make sense to finance your purchase?

- Money talks, so having cash on hand can be important if you are making a very competitive offer on a hot property.  However, you need to consider what you can be making on that cash if were kept liquid and invested in other ways vs. a low-cost mortgage.  Keeping the cash liquid will also help if you need to update the investment property once you take possession.

Is it better to become a flipper or a landlord?

- Yes!  The answer is both.  It really depends on your long term goals.  If you become a landlord you benefit from potential growth in equity overtime in owning a piece of real estate.  However, you also then need to maintain it and deal with tenants. Some landlords will choose to pay a management company to handle that for them.  Alternatively, a flip can allow you to make an instant profit and move on...IF you are lucky enough to get a great deal on a desirable property and don't over-improve it get it sold for top dollar fast!  This is where it's key to partner with a Realtor that has finance, project management and marketing experience. Financing options vary for each.

How important is location?

- Location.  Location. Location.  It's true...it's HUGE.  To see this for yourself, check out recently sold homes that are the same in type and size and finishes but in very different neighborhoods.  Also look at how fast they sold or rented. You don't want to be struggling to find a buyer or tenant. 

Is it better to purchase a house, townhouse, duplex or condo?

- It really depends.  If the location and all else is equal, you'll have less maintenance as a landlord, or likely property updates if flipping, by investing in a townhouse or condo.  A duplex gives you the advantage of oftentimes twice the rental income of a single home and the opportunity, if you wanted, to live in one half and rent the other.  A single-family home in a very desirable school district and neighborhood will always be in demand. There's not a hard-fast rule, but it really comes back to selecting the "right" property that will help you best achieve your goals. 

Christa Kusler, NMLS # 139862
215-807-9300
Branch Manager
America One Mortgage LLC, NMLS#1780221
https://www.blink.mortgage/app/signup/p/americaonemortgagellc/christakusler

Dave Marcolla, MBA/C-RETS/ABR/SRS/SRES
NJ & PA Licensed Realtor
Principal, The Dave Marcolla Group
Keller Williams Real Estate - Newtown
www.davemarcolla.com/dave@davemarcollacom
609-423-9147 Direct/ 215-860-4200 Office

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