Ramblings of a Baltimore area Realtor

Risk vs Reward - Purchasing Residential Investment Property

Risk vs Reward

Purchasing Residential Investment Property

When considering purchasing your first investment property many new investors are captivated by the possibility of really high returns on initial investment.  I refer to this as the Magpie Syndrome where investors are attracted by shiny baubles (coins) and high returns without realizing the risks involved in owning property in riskier neighborhoods where there is high crime, high risk of vandalism, high risk of tenants not paying their rent and even not being able to rent the property because of the neighborhood. 

A few things to keep in mind when weighing risks and rewards are:

Local Laws - This is really crucial when starting.  Some areas are not investor friendly and the local government tries it's best to discourage investing.  You'll also want to become familiar with health and safety and licensing regulations in the area you are considering. 

Population density and demographics – the number of renters vs home owners in the neighborhood and any future changes.  Some neighborhoods might appear risky at first but there may be a steady stream of rental prospects based on community demographics.

 Education Standards – Be sure to check not just the elementary but also the middle and high school statistics in the area you are considering.  Keep in mind that most of Baltimore City and County has converted to the Magnet program but not all schools in Baltimore County participate so you’ll want to know that.

Access to Transportation – This could be important if your rental property is in a neighborhood where tenants might need to access bus or light rail to get to and from work.  If you purchase property closer to Washington DC having a property close to public transit is a very valuable consideration for prospective tenants.

Bedrooms and Bathrooms  - I would never recommend buying anything less than a 3 bedroom home for an investment unless there is demand for less.  People will rent a 3 bedroom if they only need 2 bedrooms but there are more prospective tenants that need 3 bedrooms.  Also keep in mind your exit strategy too. 

Financing - How are you going to purchase your property?  You'll want to be sure to ask your Realtor for a referral to a good lender that is experienced in financing investment real estate, reading spread sheets and tax returns.  This becomes even more important with each additional property you purchase. 

 

Exit Strategy – Always begin with the end in mind.  What are your short, medium and long term goals?  Are you saving for college?  Putting your kids through college? Saving for retirement?  How long do you plan to hold these properties and how do you plan to dispose of them and are you buying for income from rent or income from appreciation or both? 

It’s very important for new investors to do their homework and weigh the risks and be sure to enlist the aid of an experienced real estate professional who is familiar with analyzing risks as well as property values.   Sometimes, it is better to take a lower return on investment to have a great long term investment rather than the short term higher gain in a riskier neighborhood. 

I am an experienced Certified Investor Agent Specialist and I own investment property and have renovated and resold property for investment.  I have helped many new and experienced investors realize gains from owning real estate.  I can help you too. 


If you are thinking of buying or selling an home in  Maryland give me a call at 410-292-0100 or start your search here and we'll talk about the market conditions and what your home could possibly be worth in today's market place if you are thinking of selling. If you are considering buying a home, there is no better time than now to buy. The tax savings and wealth building alone is worth the plunge into todays market.  The Ed White Team and Remax Executives is connected with some of the brightest and best real estate agents in the world and can assist with your move here in Maryland or anywhere in the United States or abroad.  Ask me how.

In keeping with saluting our heroes, during 2016 I am waving flat fees for active duty military, retired military and the families of fallen military, as well as policemen, firemen and emt's purchasing a qualifying primary residence. If you enter into a contract by the New Year's eve I will waive the flat fee at settlement. This is a $395 savings. If you are thinking about buying or selling a home give us a call and receive full service real estate assistance from an experienced agent. Our office is open 7 days a week and we can be reached at 443-274-1100 or I can be reached directly at 410-292-0100.

June Piper-Brandon ~ Buyer's Specialist/Associate Broker, CDPE, CIAS, ePro 

The Ed White Team, Remax Executives

City Living Expert

 

 

 

 

 

 

June Piper Brandon - Agent with Century 21 New Millennium

June Piper Brandon - Agent with Century 21 New Millennium

Comment balloon 1 commentJune Piper-Brandon • September 26 2016 07:32PM
Risk vs Reward - Purchasing Residential Investment Property
share
Risk vs Reward Purchasing Residential Investment Property When considering purchasing your first investment property many new investors are captivated by the possibility of really high returns on initial investment. I refer to this as the Magpie… more
Investment Opportunity - Positive Cashflow Rental - Brooklyn Park, MD
share
Investment Opportunity - Positive Cashflow Rental - Brooklyn Park, MD Great opportunity to purchase an investment property with a stable long term tenant of 9 years. Tenant pays $1300/month rent - not section 8 Property was originally a 2 unit… more
Speechless Sunday - Gotta Love Bawlmer Hun!!
share
Speechless Sunday - Gotta Love Bawlmer Hun!! Look at those trademark Pink Flamingos that seems to be one of the symbols of Balmerese!! Would you like to live in this Hampden neighborhood? I can help you find just the right house for your needs in… more
Never Under Estimate The Power of a Business Card
share
Never Under Estimate the Power of a Business Card You never really realize how powerful that little piece of paper is until you don't have any to give out. I recently changed brokerages and it took a while to finalize all the details and… more
Baltimore, MD 21225 - 4 bedroom Home For Sale
share
Baltimore, MD 21225 Anne Arundel County 4 bedroom Home For Sale This great detached home is located within easy reach of BWI Airport and might even make a great crash pad for flight attendants and pilots on layover. Home is in the desirable… more
Coming Soon - 2 Homes on N. Broadway, Baltimore, MD
share
Coming Soon 2Homes on N. Broadway, Baltimore, MD Oliver Neighborhood of Baltimore City Located just a few blocks from the Broadway campus of Johns Hopkins and in the area where employees from Hopkins could qualify for the Live Near Your Work grants… more
Approved Short Sale - 100 Kent Road, Glen Burnie, MD 21060
share
Approved Short Sale 100 Kent Road, Glen Burnie, MD 21060 You won't want to miss this great home in the Glen Gardens neighborhood of Glen Burnie. This lovely all brick cape cod sits on a nice corner lot and features hardwood floors, granite… more
Catonsville Real Estate Market Update Year to September 8, 2016
share
Catonsville Real Estate Market Update Year to September 8, 2016 Catonsville, Maryland is located in Baltimore County and has a population of about 41, 567 at the 2010 census. The community lies to the west of Baltimore City along the city’s border. … more
Glen Burnie & Anne Arundel Co, MD - Market Update Year to 09/08,…
share
Glen Burnie and Anne Arundel County, Maryland - Market Update for the Year to September 8, 2016 Glen Burnie is located south of Baltimore City in Anne Arundel County and offers many affordable housing opportunities for those relocating to Ft. Meade.. more
Dining Out for Life - September 15, 2016
share
Join Moveable Feast for Dining Out for Life Make One Meal Matter September 15, 2016 On this one special day, restaurants will donate a minimum of 25% of your bill to support Moveable Feast 's mission to provide nutritious meals and other services… more