Appreciation inValue Over Time Look to purchase a home in an area that has historically shown appreciation in value equal to or greater than in other areas. Your ultimate disposition of the house will produce a higher ROI (return on investment) if you can buy in an area with substantial appreciation. But, remember that you are playing a long game, and therefore, appreciation shouldn’t be a complete deal killer. Buy BelowCurrent Market Value Whatever you determine the current value of the home to be, consider buying it at a lower price; any negotiation that lowers the price works in your favor. It also locks in a profit at the closing table and provides a higher ROI when you sell. I have always been of the belief that buying at even the slightest discount makes sense anytime, anywhere. Create a Positive Cashflow You must do a thorough analysis of the costs of ownership and the expected rent you can charge. That allows you to determine if you can structure your investment to provide your desired monthly cashflow. You want a positive flow of monthly cash over and above your actual cash outlays. You also get some great tax breaks from owning rental property, one of the best being the depreciation deduction. If you can construct a rental property investment that meets these criteria, your success is almost assured. You will see your investment grow in value over time while you are banking cashflow every month and enjoying tax advantages. Remember, slow and steady always wins the race.
Abhi Golhar is a full-time real estate investor, Think Realty coach and host of Think Realty Podcast. Connect with Abhi at BookWithAbhi.com.
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