The article touches upon the issue of Investing In Single Family Homes. Here is some useful information on a real estate investment option in single family homes.
While making an investment, the foremost consideration is to see the feasibility of receiving returns from the money invested on an asset. The more liquidity you have of the asset, better will be your investment that you have made. What you are looking for in an investment in real estate is how quickly or how much money you will make from it by giving it away on rent, or simply the profit you will make from an outright sale. In real estate, single family homes are considered a better choice as they are stand-alone home units.
What makes a single family dwelling a better choice?
As we saw, feasibility to acquire quick and good returns on investing on an asset is profitable. Single family dwellings have some distinct advantages. First, they are sold quite quickly. In addition, it is easier to procure loans for them as the benefit of equity could be availed in securing the collateral, or in refinancing. Since, small family homes are always in great demand, there is always a ready market available for them. In addition, as there are considerable numbers of such dwellings available for sale, there is a lot of choice to choose from.
Small family homes and financing
Another beneficial aspect of small family homes as an investment option is financing. When arranging for finance, lower interest rate and a higher loan-to-value ratio are what accounts for most. Both these can be secured in small family homes rather than any other real estate investment alternatives. Sometimes it is even possible to purchase an owner occupied house with little or no down payment in cash.
A word of caution
A possible disadvantage of investing in small family homes could be that the amount of rent such homes could fetch is not always big enough to cover the debt installments incurred on the purchase of the same unit. A possible solution is obtaining tax benefits on such properties, such as depreciation. Thus by claiming sufficient tax benefits for your property, you can still benefit from it. Offering the property for sale or lease option could also prove profitable, by working the deal, avoiding the negative cash flow altogether.
What to look for before purchasing a small family home?
Faulty or substandard construction, possible violation of any building code regulations, unattractive or inconvenient floor plans or overall layout, and unsafe, unhealthy neighborhoods are what to be avoided, while selecting your property.
With these precautions, you can look ahead to invest in a single family home, and expect profit from it, too!
A short sale is when you can buy a property at a discounted rate from a financial institution that has provided a loan to a homeowner, who is unable to pay off the balance loan. This financial institution could be any lender including a bank. These lenders will be willing to sell you the property, since they would not want a bad debt on their hands and in case of the property being auctioned off, they would face a substantial loss.