Buying Investment properties

Buying an investment property takes serious consideration.  Everybody thinks you can buy a foreclosure and make lots of money.   That is not always the case. The first question is do you want to “flip” the house?  Flipping a house means that you buy it for a low price, fix it up and sell it for more money.  In this buyer’s market in Southeastern Michigan that is a tough thing to do. 

 

The two problems that you have in Metro Detroit real estate is that home prices are continuing to fall.  If you buy a house now for a $100,000 in a year it may be worth only $95,000 or $90,000.  The second problem is that it is taking long periods of time to sell a home in Southeastern Michigan.  It doesn’t matter whether it is Detroit Real estate or Northville real estate, homes are taking longer to sell.  I have seen houses on the market over 2 years.  The average time on the market in many cities is over 150 days.  So then the question becomes how much will you lose in the “cost of carrying” the property.  By the “cost of carrying” I mean the cost of the mortgage interest, the cost of heating the property, the cost of taxes.  If you take one month to fix up the house and then five months to sell it you have 6 months of costs.  6 months of utility bills, 6 months of taxes, 6 monthes of gas and electric bills.  That money is a cost that is deducted from your profit, along with the real estate commission.  I definitely would not want to try to sell it FOR SALE BY OWNER (FSBO) in this market.

 

Or do you want to rent it out and become a landlord.  I am going to do a series here on what it takes to be a landlord.

 

Visit this blog over the next month and you will see the complete series of being a landlord.  What to consider, potential problems, advantages, legal things you should do.

 To search Michigan homes for sale Feel free to search over 60,000 Metro Detroit homes for sale on my website www.russravary.com  Lots of buyers tips, sellers tips, Oakland county information, Wayne county real estate info