Make a wise investment with real estate

The real estate market is still blazing across the Triangle, and these market increases ensure home prices remain at an all-time high. If you’re a homeowner that’s built equity in your home, then you are already aware of the reality that real estate is an outstanding investment.

The Triangle MLS reports a 24 percent increase in median sales prices over the last year. Historical data from the Triangle MLS also shows those median prices have increased since 2012. In other words, a real estate investment within the Triangle offers an outstanding return on investment and will continue to do so for the foreseeable future. If you’re looking for a way to invest, real estate may be the way to ensure your success.

Here are 3 ideas for how you can make a smart investment in the Triangle real estate market.

The purchase of a home to use as a rental property can be a great investment if you’re prepared. Currently, the median price of a one-bedroom rental in the Raleigh area is over $1,300, which is a 35 percent increase from the last 5 years. That means if you have the means to invest in a rental property in the Triangle, you could see a great return on your purchase.

If you’re considering a rental property purchase, you may need to work with a trusted lender like Towne Mortgage of the Carolinas to discuss how to secure traditional financing. Making necessary updates to the home you plan to rent can make the home more appealing and help ensure you get the most money out of your property. There can be added costs to managing a rental property, like maintenance, property taxes, and insurance, so keep that in mind if you choose this as an investment. 

If you find the idea of a rental property intriguing, but you don’t have the time to be a landlord, it might be beneficial to hire a property management company. Management companies can help find tenants and maintain the property for you. Rental management companies have associated costs, so weigh your options carefully before making any final decisions.

If you like the challenge of renovating a home, flipping a property might interest you. The great thing about finding a property that needs a bit of TLC is that you can make money within a shorter time period. Foreclosed and fixer-upper homes are great properties to consider, particularly if it’s in an outstanding location. You’ll need to work closely with a real estate agent, such as one of The Jim Allen Group’s many agents, who will have your needs in mind and who has a great pulse on the market.

Flipping a home typically takes more of an up-front investment. You’ll need to purchase the home and cover any expenses associated with the renovations. If you’re financing a short-term project like this, it helps to understand the pros and cons of this type of funding. A lender like Towne Mortgage of the Carolinas can provide you with insights about what happens if you pay off the loan within the first year.

You’ll also want to make sure you have a great contractor. Fixer-uppers come with unique challenges you won’t want to tackle alone. Whether it’s tearing out walls, repairing a roof, or gutting a kitchen or bathroom, it’s important to know you can get quality work done within an appropriate timeframe. And most importantly, you’ll need to make sure you can sell the home for a healthy profit when the time comes.

Do your research to better understand the 70 percent rule in flipping. That means you shouldn’t invest more than 70 percent of what you believe the home’s after-repair value will be, minus the cost of renovations. Consult with a trusted Realtor to make smart choices when making renovations so you list it at a profitable number.

Love the idea of real estate investments but don’t want to be a landlord? You can invest in a real estate investment group (REIG). A REIG is like a mutual fund and is typically made up of partners or shareholders. A REIG pools money, which is then divvied up into various investment opportunities. The money is typically diversified across many types of investments to generate a better return.

To ensure you get the best return on this type of investment, you’ll want to make sure you’re working with a highly knowledgeable group with skilled decision-makers. Ask about group fees, which may eat into your profits. And make sure your mission aligns with the partners you choose to invest with so the venture is successful on all levels.

Talk to your financial advisor and a trusted mortgage lender to determine if any of these solutions are right for you. They will be able to see your full financial picture and offer the best advice to make a sound decision.

Raleigh real estate is hot. Any real estate investment within the Triangle is sure to be a smart one.

The Jim Allen Group provides access to information on this blog/website as a public service for educational purposes only. Although reasonable efforts have been made to ensure that all of the information made available is current, accurate, and complete…[read more]