| I get calls from new investors all the time that want | | | | - Homeowner’s Association or CIC (common |
| to buy a good investment. My question to them is | | | | interest community dues if there is one or more |
| what would make it a good investment? And of | | | | – yes some properties have up to 3 associations |
| course the reply is “I don’t want to lose | | | | to pay dues to) |
| money, I want it to be worth more in a couple of | | | | - Property manager’s fee (unless you want to |
| years. Do you think that will happen?” | | | | be the one the tenants call at 3am with a plumbing |
| Now I don’t know about you, but crystal ball is | | | | problem) |
| broken. It’s been in the shop for months and no | | | | - Money set aside for possible repairs |
| one has been able to come up with the parts I need | | | | - Money set aside to renew the home warranty you |
| to fix it. So instead I try to have them put it in | | | | bought next year (an extremely worthwhile |
| perspective. | | | | investment when it comes to helping maintain |
| If you’re buying a property that you intend to | | | | necessary systems, keep your tenants happy and |
| hold and lease out, how much of a profit would you | | | | your wallet happier) |
| need to make every month for it to be considered a | | | | So when determining if a property is a good |
| good investment? $100 a month? $300 a month? | | | | investment, find out what it will lease for in good |
| $500 a month? More? How long would you have to | | | | condition. Decide what price you would have to pay |
| hold a property for you to feel like you made your | | | | for it and how much you’d have to put into |
| money’s worth? 2 years? 5 years? Longer? | | | | repairs to make it a place good tenants would want |
| In our market, many investors have discovered that | | | | to lease. Make sure NOT to overprice your property. |
| they can easily make $300-$400 a month positive | | | | Great properties have lots of people want to rent |
| cash flow per month based on what the property | | | | them but not if they are much more to rent than |
| costs them vs. the rent they can collect. When | | | | another property. |
| you’re deciding if that’s enough for you, | | | | If the numbers make good sense to you, and |
| remember to calculate all your expenses. | | | | you’re in the black, then buy it. Have your |
| Typical expenses on an investment property include: | | | | financing or proof of funds ready, decide what the |
| - Principal and interest, if you financed the property | | | | most you can afford to pay is and go for it. Happy |
| - Taxes | | | | Investing! |
| - Insurance | | | | |