INCOME PROPERTY INVESTING FOR NEWBIES
Investing in real estate continues to be a lucrative industry, allowing some investors to earn six figures or even seven figures annually. Jumping into property investing isn’t something you want to do without some knowledge of the industry, though. You have to understand different terms like hard money and private money, especially when it is time to start financing your real estate investments.
You can find both hard money lenders in Alaska and private money lenders in Alaska. This will definitely come in handy when you begin buying properties to rent out.
HARD MONEY VS PRIVATE MONEY LOANS IN Alaska
The main difference between private and hard money loans in Alaska is that one has more of a structured process over the other. Both are non-traditional lenders, which makes obtaining funds easier than a traditional bank loan, especially for those with not-so-great credit scores. Private money lenders in Alaska can be anyone – a friend, family member, business referral or so on. The terms in these cases are typically very flexible with no preset criteria.
Hard money lenders in Alaska normally have lending criteria that must be met, rather than basing the terms on your financial past. When you enter into an agreement for a hard money loan, you will have defined interest rates and durations issued. This is what you want to look at when determining which hard money lender to opt for.
Now, let’s dive into the Do’s and Don’ts of income property investing.
DO: STUDY THE NEIGHBORHOOD BEFORE YOU BUY
This will play an intricate role in your ability to rent out the property. If the community isn’t any good, then people won’t want to live there. And if they do, they won’t expect to pay much, so be prepared to lower your rental rates.
DO: KNOW THAT THE BOTTOM LINE IS ALL THAT COUNTS
Get out your calculator and do the math to make sure that you’re actually making a profit. Again, if you buy a really cheap property, but the rent isn’t covering overhead costs, then you’re going to end up losing more money than you’re earning. Make sure to factor in maintenance costs, insurance, repairs, vacancy rates, property management and community fees, property tax and income tax.
You want to ensure that each of your properties continue to add to your bottom line. If you notice there’s more repair work than anticipated, then you should consider selling it if it’s not something you can afford.
DO: GET YOUR PERSONAL FINANCES IN ORDER
You don’t want to be struggling with personal financial problems while you’re building your real estate portfolio. Take care of any major expenses beforehand, so you can free up your mind and your finances for your new business venture.
DON’T: FORGET YOUR INVESTMENT GOALS
Are you looking to rent this property out for the long-term or is this going to be a short-term ordeal? It’s your money that will be tied into the place, and you may have loans to repay, so make sure to factor your timeline in to any contract you sign.
DON’T: RUSH INTO A REAL ESTATE DEAL BECAUSE IT’S A “DEAL”
As they say, if it’s too good to be true, then it likely is. Make sure to look over the specifics of a deal and certainly schedule an inspection before you agree to purchase anything. If needed, have a broker or third party read the contract before signing to check for red flags.
DON’T: PURCHASE WITHOUT SEEING THE PROPERTY FIRST
You should personally pay a trip to the property before you agree to buy anything. Pictures don’t do much justice because they may be outdated or creatively downplay or hide structural issues or needed repairs. Plus, you can’t replace the five senses with one. If you can’t make it, then send a trusted real estate agent out to view the property for you.
There’s a lot of potential money to be made in income property investing, but you have to play your cards right if you expect to cash in. If you’re not willing to do the homework yourself, then you need to partner with someone who is. You can also work with a real estate broker or realtor, so you can have an expert opinion before agreeing to a deal. They can also point you in the direction of obtaining a private or hard money loan.
WHAT SHOULD I DO NOW?
Call or Email Cristina Alexander for an Investment property analysis and consultation.
NEXTHOME Arctic Sun, Fairbanks, Alaska 907 987-6897
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