Why Have Investment Property?
You may be interested in buying an investment property if you want to diversify your holdings beyond the stock market, your own home, or even stock options. You often read stories or watch TV shows about quick flips (buying a home, renovating it, and reselling at a much higher price), holding the property, gathering rents, and gaining market value is the true core of real estate investing. Renting generates steady monthly income. Why have an investment home?
Passive Income is great for retirement when your regular 'day job' paycheck stops.
Fixed assets, which is what a home is, is a perfect way to diversify your portfolio. Remember everyone needs a place to live, but they may not need the latest tech gadget or service.
Investment property is like a forced savings account. If you purchase investment property when a child is born for example by the time they are ready for college you might have a nice nest egg.
As with all investments choosing the right property is key. Have a smart agent guide you through the process is critical. Also investment property you have to have a cushion of cash to cover maintenance, times without a tenant, property managers, etc.
I know what you are thinking. I can barely afford San Francisco, how can I purchase an investment property. The key is looking outside the city. I referred a client to a great agent in Sacramento for his investment property. He landed a fantastic 4 bedroom / 3 bath home in a good part of Sacramento for just over $300k. Depending on your downpayment, you might be cash flow positive from the very beginning. If you add $100-$150k to that total you can get a multi-unit building. The key to being an out of area landlord is to hire a local property manager that handles all the daily work for you and factor that cost in to the purchase. Yes, you have to pay them but as a long haul investment, it is worth it.
I have a handy rental calculator that factors in everything from vacancy rate, property management fees, maintenance, etc. Contact me if you would like a copy and if you want a referral in an area that has low purchase price compared to rental values.
Congrats to JC for landing this great place in Sacramento. I have a large network of agents across the area and country if you think investment property is right for you.