Not all home purchases are created equal, and neither are the needs or wants of buyers. It’s not on everyone’s dream list to own a vacation home on the beach adorned with sea foam-colored furniture and collected seashells (but for the life of us, we can’t imagine why!) Some opt for having a retirement retreat ready and waiting for them once their kids fly the nest, and purchasing a rental property to generate an additional income stream or as a long-range financial strategy might not be everyone’s cup of tea. The buying world is an ever-evolving landscape, and in such a dynamic environment, it never hurts to gather more information. That’s why we tapped into the expertise of Heather Reichenberger, RE/MAX Results Realtor, to provide insight into the nuances of property investments.
What are some key factors to consider when deciding to invest in a property?
First, it depends on what type of investment the client is looking for. Do they want a rental property or a house flip they plan to resell after fixing it up? Each client is unique and has different comfort levels of what they can take on. I work with very experienced investment buyers looking for properties to flip, some newer flippers, and clients who are just looking to build their portfolio of rental properties. To find the right property, I help determine each client’s needs, preferred location, and goals. We also want to learn if the area they’re looking at will bring them the ROI (return on investment) they need for the investment to make sense for them.
What are some potential risks associated with investing in real estate, and how can investors mitigate them?
There are always unknowns when you buy any property, especially when remodeling is involved. For example, opening walls can lead to more work, which leads to unexpected costs. The key is to have an inspector or contractor involved, or perhaps even the client having knowledge of the construction industry, to make sure they know what they’re getting into. It’s also important to have a backup plan if something changes in the scope of the work.
How does purchasing a rental property differ from buying a primary residence?
They are pretty similar as far as the purchasing process goes unless you’re getting into multi-unit properties (more than four), which are then considered commercial, and that’s something entirely different.
What is your role in this process, and how do you assist your clients if they show interest in purchasing an investment property?
My role as the client’s agent is to assist them in finding properties that have the potential for what they’re looking for, a house flip or rental property. I also help them find properties that fulfill their criteria, such as price, neighborhood, etc. As an agent with RE/MAX Results, I have a broad network with over 1300 agents throughout the metro and its suburbs, so I’m quickly informed when new listings hit the market, which I can then share with my clients. Once they have a property under contract, I can also provide an extensive vendor and contractor list if the client plans to fix up the property and wants recommendations.
What is the current state of rental properties?
With the interest rates rising to 8% last fall and into winter, buying in general has slowed down. But during that time, since there wasn’t a lot of competition and not as many multiple-buyer situations, it turned into a great opportunity for some. Investors looking to build their portfolio were smart to keep up their search because they may now have a great flip to sell. Now that the rates have gone down, this could lead to more potential gain on the sale of that property in a spring market.
If you’d like to connect with Heather and learn more, you can find her at https://heathersresults.com/
We also want to learn if the area they’re looking at will bring them the ROI (return on investment) they need for the investment to make sense for them.