Buying Investment Property Can "Set You Free"
Storybook Properties Can Show You How!
So what exactly is investment property? Before buying investment property, learn what may be the best type of investment for you.
Storybook Properties can shed some light that may help you with your decision making and purchase.
Investment property is defined as any property purchased other than for your own personal use for the purpose of financial gain, whether it be income producing and/or for future appreciation and profit.
The investment could be income producing such as a rental home, 1-4 multi-family residential units, apartments, mobile home park spaces, non-residential storage spaces, leasing of land or leasing of commercial space.
Another example of an investment property would be non-income producing such as a vacant lot or land held for future appreciation and profit.
The key to all types of investments is to be savvy when making a purchase. Buying at the peek of the real estate cycle will negatively effect income cash flow tremendously, possibly creating a negative cash flow as well as taking years to recover loss in equity from the next inevitable declining cycle ahead.
We have, however seen veteran buyers choose to buy at the peek as their choices were limited. An example of this would be selling an investment property that realized a gain and needing to reinvest the proceeds in order to avoid or delay tax liability.
So in a nutshell, the bottom line is the well known cliche "buy low, sell high" whenever possible!
Making the right investments at the right time can set you up with positive cash flow income and/or huge future appreciation profits when the next real estate cycle dictates to "sell" and cash in! Ching-ching!
What Is "Cash Flow"?
The amount of net cash generated by an investment during a specific period.
One quick and dirty cash flow formula for income producing properties measure the gross potential income (GPI) from all sources that the property produces, less vacancy, all operating expenses such as property taxes, insurance, management, maintenance, utilities, reserves for future budgeted repairs, and finally the debt service, better known as the mortgage.
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