Real Estate Goals

I mentioned in a previous post that I am looking to get into real estate investing. I have been wanting to do this since my second year in college, when I realized that there is a huge market in college towns for rental properties because of all of the college students renting off campus. I am sure that it varies at different schools, but I have determined here that the average rent is around 300 dollars a person. I am still working on the numbers, but that creates a great opportunity to buy a house or townhome and rent it out.

I have made friends with several Realtors in town and plan on contacting them soon to let them know of my intentions to purchase a property to rent. There are several things to look for when purchasing a rental property. It is important to find something that you can rent easily first of all, because if you can't rent it then it becomes a very expensive liability very quickly. You want this to be an asset, which is something which puts money in your pocket.

This leads into the next thing that you want out of an investment, which is positive cash flow. The income from rent needs to cover the mortgage payment, property tax, insurance, maintenance, HOA, etc. These costs are all very predictable, with possibly the exception of maintenance. A good handyman or home inspector can give you a heads up on potential problems that could lead to expensive repairs in the near future. It would be wise to have this inspection done before purchasing the property, that way you can use it as a bargaining tool to get a better deal on the house.

This brings up a third thing to look for in your investment property: appreciation. You want to get something that is in a growing area of town, that is not going to lose value. A good real estate agent can advise you on this more.

There are many tax credits available right now for first time home buyers, and if you are going to live in the house then you can get financing easier as the primary resident. A good idea for college students is to convince your parents or a close friend with good credit to cosign so you can get better financing.

Look for future posts on real estate and techniques for achieving greater cash flow through depreciation and tax savings.

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