You’re in decent company because you’ve recently acquired a land for investment purposes. The latest statistics indicate that up to 25% of those who intend to use this property only for investment purposes have made these transactions. There are 4 items you need to be mindful of that can cause a crimp for your earnings if you hope to “flip” the house.
- Property Tax. Hold your property for a couple of years and you will experience an increase in property taxes especially if your taxes are reassessed in this period. Taxes have almost risen in just 5 to 6 years in certain booming real estate markets.
- Renovation Cost. You could have owned a “fixer upper” at a cost of bargaining. After finishing your project, are you going to be able to recover costs and make a profit, particularly when the valuation of your restored property is higher than that of your area? Moreover, can you avoid an immovable corrections?
- Insurance. If you do not occupy the house and have tenants, you can cost extra for homeowners insurance. You realize that your interest rate is even higher if you fund the house.
- Rental Pressure. A rent-saturated environment ensures the rent you will charge is less than what you anticipate. You must obtain special permits in certain markets to be a landlord. The legal protection of tenant in some markets ensures that you will wage a long and painful struggle to rid yourself of a poor tenant. Would the expenditure drag down with reduced profits along with the extra expenses?
Of course, by updating most, asking for unreasonable property tax rises and choosing a good and reliable tenant for yourself, it is possible to limit your risk. It’s not convenient to swing around a property, but it does create good profits for you with a lot of pluck and resolve.