There’s a reason why so many people chose to invest in Arlington real estate over stocks and bonds. With planning and effective management, a smart Arlington real estate investment can make more money over time, and it has a better appreciation value. Homes increase in value on average of 3.9 percent every year, which means your initial investment is growing every day.
Before you get started in this lucrative market, there are a few things you need to know and decide. Check out this helpful list and start preparing for your new investments.
Take stock of your current financial situation.
One of the toughest parts of entering real estate is that it has a high upfront cost. Not only are you taking on another mortgage, but you’ll also have to pay for maintenance and upgrades around the property. If your property is empty for a period of time, then you’ll effectively be paying two mortgages.
The best thing to do before investing in Arlington real estate is to sit down and look over all your finances. How much money do you have in savings? Some people like to wait and buy properties outright rather than opting for a rental loan. That, for course, requires more savings.
You should also look at what kind of property you can afford. For example, you can buy a second property, or you can buy a property that has a basement or garage that can be rented out. Both options come with plenty of pros and cons. If buying Arlington property outright isn’t for you just yet, then living in your investment property with an additional rental unit would be a smarter investment. This option usually allows for a lower mortgage rate as well.
Calculate your cash flow.
Most investors chose one of two options: house flipping or rental properties. House flipping involves buying a home, renovating it and then selling it for profit. This often results in quick profits, but if the house doesn’t sell, then you could end up paying more than you have. With rental properties, you will rent out your property and use the rent to pay off the mortgage. This is a long-term project, but when the mortgage is paid, then you’ll have your own home and any ongoing rent is all yours.
To calculate your potential cash flow, it’s important to look at the areas where you plan on buying. If you’re going to flip, how much are homes in a particular area selling for? If you’re planning on renting, what are the average rent prices in the area.
Both numbers will depend on several factors. For example, being close to a good school or university may drive up property and rent values. Homes located in desirable neighborhoods and near major highways or transit stops also do very well.
When you calculate your cash flow ahead of time, you’ll have an idea about how much you can expect to make. This will help you decide which method of real estate investing is right for you.
Analyze the investment types.
There’s more than one way to go into Arlington real estate investing. Some people opt to go in alone and do all the work themselves. For others, especially those with full-time jobs, there just isn’t time to devote solely to real estate investment.
If you worry about time commitments, then you might try either a partnership or a publicly-traded investment trusts. Having a good partner can take much of the strain of real estate off your back. Though you will have to split profits, you may be able to invest in bigger and better properties with a partner. You will also have another person’s skills and strategies on your side. If you’re new to investment, then this can be a huge benefit.
A real estate investment trust will help you fund and manage more than one project. If you don’t have a lot of time, these trusts will handle much of the day-to-day work for you, freeing you to reap the benefits.
Though Arlington real estate investing may be intimidating at first, it can become a great source of revenue as you build your portfolio. Once you get started, you’ll see just how fast your wealth will grow and your properties will flourish.