The Do's and Don'ts of Buying Investment Property
LOUISIANA REALTORS • July 17, 2017
Investing in real estate
can be a great investment. Not only can it grow in value over time, but it can also provide a continuing income source. However, as with any investment, it is important to understand the risks. Unlike the stock market, where you can invest in smaller increments, real estate requires a much more significant investment. Here are few things to make sure that you do, and few to avoid before you buy your first investment property.
Do Make Sure an Investment Property is For You
Owning a second home means even more responsibility, especially when it comes to repairs and maintenance. Handling these tasks yourself can save a lot of money. It’s important to consider the extra time and cost of owning a second property before you commit.
Don’t Try and “Flip” a Property
While this may seem like a fun way to turn a profit, at least for your first investment home, this is not a good idea. The cost of doing a major overhaul on a property can easily get out of hand, making it even more difficult to get your money back from a rental or even a sale.
Do Hire a REALTOR®
Just as you would with your primary residence, seek the knowledge and expertise of a REALTOR®. Understanding market value is crucial when it comes to investing and knowing what areas are growing, and what areas aren’t can position you for a successful investment. REALTORS® also have strong professional networks. Mortgages for investment properties are different than for your primary home, so having access to mortgage brokers, banks, and other professionals can help you get the best deal.
Don’t Underestimate Your Margins
Obviously there will be costs associated with owning this second property and it’s vital to understand them all to ensure that you are earning a return on this investment. HOA fees, insurance, and maintenance will all eat in to your bottom line. It is also a good idea to budget, save, and plan for any major repairs and for vacancies when you won’t have a revenue stream, but will still have these obligations.
Investing in real estate can be fun, exciting, and lucrative. Before you jump in feet first it is important to understand the ins and outs of owning an investment property in terms of everything from responsibilities, liabilities, costs, and management.
Louisiana REALTORS® welcomes SpaceX’s announcement of a more than $100 billion investment to build its largest launch facility in Vermilion Parish, recognizing the historic project as an opportunity to create thousands of jobs while generating significant demand for housing, construction, infrastructure and commercial development across the Acadiana area and Louisiana. According to Louisiana Economic Development, the SpaceX project is expected to create more than 3,000 direct new jobs over the next 10 years, with an average annual salary of $92,600, as well as more than 8,100 indirect jobs. The project is also expected to generate 34,516 construction jobs at peak construction. For Louisiana REALTORS®, the significance of the investment extends beyond the jobs created at the SpaceX campus. Major economic development projects bring new workers, families and businesses to Louisiana, creating demand for homes, rental housing, commercial properties and the infrastructure necessary to support growing communities. “An investment of this magnitude creates opportunities that reach far beyond the project itself,” said Norman Morris, Chief Executive Officer for Louisiana REALTORS®. “Thousands of new jobs mean more families looking for places to live, more businesses needing space and more construction activity to support that growth. Louisiana REALTORS® welcomes this investment because a strong economy and a strong housing market go hand in hand.” The planned SpaceX campus is expected to become the largest spaceport in the world, with capacity to support thousands of launches annually. At full buildout, the site is expected to include five launch complexes with two launch pads each, propellant facilities, power generation, vehicle processing and residential housing for employees and their families. Construction is expected to begin in 2027, with initial operations targeted for 2030. The construction component alone represents a significant opportunity for Louisiana's workforce and businesses. LED estimates that the project could support more than 34,000 construction jobs at peak construction, while SpaceX has joined Source Louisiana to provide Louisiana suppliers, contractors and service providers with a pathway to compete for project-related opportunities. “Louisiana has an opportunity to make sure this historic investment translates into lasting opportunities for Louisiana families and businesses,” Morris said. “That includes having enough housing available for the people coming to work here and creating an environment where builders, developers, contractors and real estate professionals can help meet the needs of growing communities.” Louisiana REALTORS® supports continued efforts to prepare Louisiana communities for the growth associated with major economic development investments. Ensuring adequate housing supply, encouraging responsible construction and development and maintaining infrastructure are essential to making Louisiana an attractive place for businesses, workers and families. SpaceX’s investment adds to a historic period of economic development in Louisiana and further establishes the state as a destination for advanced industries, manufacturing, technology and aerospace. LED describes the project as positioning Louisiana as a global hub for next-generation aerospace and a new center of private spaceflight activity. “Louisiana REALTORS® is excited to see what this investment can mean for the future of our state,” Morris said. “When Louisiana wins major economic development projects, our communities have the opportunity to grow with them. We want to see that growth supported by quality housing, strong communities and opportunities for Louisiana businesses.” Louisiana REALTORS® welcomes SpaceX to Louisiana and looks forward to the opportunities this transformational investment can create for Vermilion Parish, Acadiana and communities across the state. Enjoy the video below from the Louisiana Department of Economic Development .
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