of the stock market? Now may be the time to invest in real estate. But financial
experts caution against pulling out of stocks and investing lock, stock and barrel
in real estate. It's no way to make a quick buck. But real estate can help you
diversify your finances.
Rental property represents a totally different
kind of investment. It's easy to buy or liquidate stocks with a quick call. But
selling or purchasing a home can take months. And it can be expensive. The most
viable rental home has three to four bedrooms and two baths. Such homes typically
sell for $150,000 and up in the major metropolitan areas.
Experts say to invest
for the long-term, with the idea that you'll own for 20 years or more. If you
want liquid assets, maintain stocks and bonds. But the cash flow, appreciation,
and tax benefits of rental property can be substantial, so long as your rent is
sufficient to cover the mortgage and provide additional cash flow. That's quite
possible with interest rates staying reasonable. The other advantage is you get
to control the asset, more so than a mutual fund. Purchasing the right home in
the right neighborhood could yield substantial returns over your initial investment.
How do you identify the best single family rental home? Follow these ten basic
1 - Choose a community that promises future growth.
2 - Choose
a home in a moderate price range.
3 - Invest enough money up front to achieve
positive cash flow.
4 - Never purchase property on a busy street.
Get an independent home inspection, roof inspection and termite inspection.
6 - Buy a standard tract home or moderately customized home on a standard lot.
7 - Research the community to assess its overall economic future.
Choose a three to four bedroom home.
9 - Pick a home with a garage, that's
a true garage, not a converted one.
10 - Avoid handyman specials or anything
that requires more than cosmetic repairs.