My New Blog

We all know that there is slippage in homeownership.  Those people losing their homes have to go somewhere.  Many will move into a rental house or apartment while they fix their credit and recover.  Fixing credit will take a while, perhaps years.  For investors holding multifamily buildings or houses for rental purposes this is good news.  Many investors were gambling in 2005 and buying homes with the goal of flipping them for short term gain.  This created an artificial demand for housing.  If you decide you want to become an investor, you should have a series of goals going in.  1)  Know how long you want to hold  2)  Amount of money allotted for improvements  3)  The type of loan, terms  4)  How much leverage you want  5)  Improvements you will make  6)  Management in place  7)  Cash flow desired. 

Then you will want to consider how large a portfolio you want, how much income you need in retirement, how long it will take to achieve your goals, time needed to pay attention to the investment, where the money will come from.  Be prepared to look at your taxes to see where the benefits are.  Also be prepared for short term or long term capital gains, depreciation recapture and the ALT.  Assess your community for vacancy rate, for the norm in rent, know what you can charge going in, assess for natural disasters.  Finally, determine is you have available cash flow should you have a personal situation arise which requires the need for funds.  Be prepared and only take on an investment you are comfortable with in the short or long term.