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Is Real Estate a Good Investment?

Real estate can be that one route towards a prosperous future and realizing the benefits that come beyond a simple nine to five employment. If you live in the local area, investing in Boise real estate might turn out to be the smartest decision you have ever made in your lifetime; this is because real estate investment can be extremely rewarding.

Similar to most lucrative investment opportunities, the real estate sector in Boise and across the United States comes with its share of challenges. For new entrants, a real estate investment can be super intimidating because there is so much to learn.

So, if you invest in Boise real estate, you must apprise yourself on various factors about real estate investment before you commit.

Most prospective investors always approach a real estate agent for an overview of what to expect with a real estate investment in Boise or Idaho in general. However, many real estate agents are known for giving a potential investor only the positive outlook of a real estate investment. My services fall within the small percentage of professionals that lookout for the best interest of you as an investor. I want you to make the best decision; therefore, my advice will dig deep into the most critical information to help you make an informed decision.

Here is what you need to know about a real estate investment:

How much money do you need to start investing in real estate?

The moment the question of how much money is needed for one to invest crops up, most investors tend to stop their research right there. A significant number of potential real estate investors will gather information from unprofessional sites hence ending up being misguided on the amount of money needed for one to invest. Working closely with a professional can help you gain knowledge that could help you proceed with your investment.

While having an existing investment portfolio can act as an advantage in providing collateral or showing income, it is not mandatory to have for you to invest. The amount of money you need to start investing in real estate is dependent on the returns anticipated from the investment, type of investment, location, and in the event of a project, its financing costs. Below are some types of real estate investments and the possible money required:

Real Estate Investment Groups (REIGS)

For example, if you choose to invest through REIGS, you have the liberty to invest in sectional property, whereby you can choose either one or several units. Under sectional properties, the REIG Company you choose to invest through often manages the property. The company does tasks like cleaning, maintaining, and advertising the housing units, but as an investor, you will have to waive part of the rental income as a management fee. To invest in REIG property, you will be looking at anything from $5,000 to $50,000 where the investment is being made individually. However, if you are looking for cheaper options, teaming up with other investors can have you acquiring a stake in investment with as little as $1,000 dollars.

Investing Through Rentals

If you are looking to start investing in Boise real estate, rentals can be a lucrative investment for you. Rental prices might turn out to be in your favor if they start rising. Rental investment is the best idea for any young person looking for long-term returns. If you are in your twenties or thirties and just started a family, you will have the opportunity to watch as your investment grows over the years.

However, before taking that step, always know that as the prospective landlord, you will have to bear insurance and maintenance costs, among many others that may arise including taxes and mortgage payments. If you have sought financing for rental properties, the money in hand needed will be around 20% of the purchase price. Therefore, for a property whose purchase price is $200,000 dollars, you will need at least $40,000 dollars for the down payment.

(There are ways to come in with less money, and if you are interested in learning about those strategies I would encourage you to schedule a call with me so we can discuss your options. You can do that by clicking here)

Some investors, when learning of the large down payment they will need, opt to look at cheaper homes as an alternative. Keep in mind, however, that low priced properties might present far worse challenges than anticipated. Generally speaking, the rent is much lower, there are repair costs you may have to deal with, and it may be difficult finding a tenant. These aren’t bad reasons to invest necessarily, but just be aware that there are different challenges when investing in lower priced homes or units.

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Should you hire a real estate agent to help you?

Having the right real estate agent in your corner is like having an asset in your real estate investment venture. You need a professional with experience in the real estate investment sector (like our team at Real Estate With Tazz).

This isn’t just someone that will tell you what you want to hear. This person is going to act as an advisor, giving you their experienced opinion on your potential investments.

As an example, when investing in a property, some defects might not be apparent on the face of it. A house you intend to purchase might be having several latent defects; therefore, a subsequent purchase might cost you a lifetime of savings. A good agent will not gloss over these defects simply to make a commission. You want a long-term partner that can you help not only find great deals, but also avoid poor ones.

Let’s wrap up by talking about a few other important considerations.

Upfront Cash

As we mentioned, you may be required to bring a 20% down payment to the table. However, in addition to the upfront cash, you will be required to take care of some of the closing costs, possibly an inspection, an appraisal, your share of any taxes owed and so on.

Additionally, as the new owner, the obligation to pay for repairs is is generally yours (although this may be negotiated with the seller). None of these are deal killers of course, but simply things you need to be aware of.

Investing is Not a “Get-Rich-Quick” Scheme

Real estate is a long-term venture, hence not the best investment for someone in need of quick money. Most rental properties begin to see returns after a considerable amount of time from the time of purchase. If your property sits empty for long, then you will have to wait longer for returns.

You are able to generate some quick cash on occasion, especially if you are trying to buy, fix, and flip. In hot markets, this is usually a little more difficult and the margins are usually thinner. But it can be done. Your best bet, however, is to approach this as a long game and treat it as such.

How do you know if you've found a good deal?

For sake of easy math, let’s suppose you find an investment for $100,000, and you can net $1,000 per month in rent. Well, count yourself lucky because you bagged yourself a good one; this is known as the 1% rule in real estate investment and is equal to a 12% return on your investment each year. The best part is that doesn’t even count any property appreciation.

Although you’d love to get a 12% return on your money, looking at a property that is returning 7% to 8% isn’t bad either. Particularly in a rising market.

If you are a prospective investor looking for help in this very lucrative business, feel free to contact Real Estate With Tazz for a complimentary discovery call by scheduling below...


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