Many prospective landlords jump into real estate investment without a great deal of information, and that’s okay, especially if you intend to hire a Woodinville property management company to handle the brunt of the work for you. However, you are bound to have more than a few questions, and the following FAQ includes a quick overview of the most frequently asked questions in the King County/Puget Sound area.
How Do I Find Property?
Look around! Whether you want commercial property or residential homes, you can find anything from single family homes and condominiums to office and industrial property. Loopnet.com, Trulia, and Zillow.com are some of the best resources for checking available property online. Alternatively, you can check with the Woodinville City Hall to find out about foreclosures and auctions, or check the Woodinville Weekly, Komo News, or the Woodinville Patch for real estate listings.
What If I Don’t Have the Capital
There are a number of programs designed to help investors raise capital for mortgages and down payments, although the majority of the professional ones are not available for single family homes or condos. Instead, anyone interested in those properties should take out a personal mortgage on their new property. For multi-family homes, apartment buildings, and commercial ventures, investors can look into a commercial loan from your bank or from one of the many programs in the area. Notably, any financial housing assistance service is for people who intend to live in their homes, not invest in them.
What Sort of Property Should I Invest In?
The type of property that you invest in should quite literally depend on your capitol. Unfortunately most types of property have their pros and cons, but generally the more units that you can purchase at once, the better price you get for each. You should of course consider the cost of any refurbishments or repairs when calculating initial cost. However, 12 or more unit apartment building typically retails for around $60-100k per unit, as opposed to an average $300-600k for single family homes. Because you can rent out 12 units instead of just one, you will make your money back much more quickly. However, you will need much higher business capital, and your taxes and management will have to be a lot more professional.
What’s a Good Price for an Investment?
This is another question that is somewhat difficult to answer. If you trust that the market will keep going up and that you can always flip the home for more than you sold it for if the rental doesn’t work out, then almost any price is a good price. If you’re afraid that the market or rental rates will go down, then you really want to pay as little as possible, or wait to invest.
If you are considering investing in a single rental home for personal investment rather than as a business, you might want to consider any homes that could be paid off within 15 years. At $1200 a month in rent, that means $216,000 should be your max investment before repairs or upgrades. However, most single family homes rent out for an average of $2,100-$3,450, meaning that you can invest a great deal more. Usually it’s simply a matter of calculating your expected ROI (return on investment), and using that to set your budget.
Want to know more about investing in property? Contact your local Woodinville property managers today at 425.285.1324