Our blog topic today is cash flow and the things you’ll need to consider when you are buying investment property in the Charlotte area. Before you buy a property, there are several questions you need to ask yourself:
Short Term vs. Long Term Investment
Decide if you are interested in purchasing a property tomorrow, rehabbing it and then re-listing it on the market in a few months, or if you want to purchase the property and then rent it out for three years, five years or even seven years before you sell it.
New Homes vs. Older Homes
Many older homes are cheaper on the front end, but then they have issues on the back end that will cost you money. Recent issues we have seen include asbestos, lead based paint, roof replacements and repairs on major mechanical systems like plumbing and electrical systems. Those costs will add up when you buy an older home.
Consider how much rehab you want to do on the property you buy. You might be interested in simply painting a few rooms and installing some new flooring, or maybe you are more interested in doing a full rehab, and getting down to the studs in the walls or putting on an addition to maximize your profits.
Your cash flow expectations will have an impact on the type of property you invest in. You might want immediate cash flow with a high cap rate, or you might prefer more capital gains on the back end of your investment.
Finally, you need to decide if there are specific features you personally want for your investment property. This might include a garage, a minimum number of bedrooms and bathrooms and other features and amenities.
Once you have thought about all these things that go into your investment property decision-making, you’ll be ready to buy. When historical data, median household income and high performing schools are important to you, South Charlotte is a good place to buy. These homes will be more expensive up front, but there are greater opportunities for capital gains in the longer term. Alternatively, homes in North Charlotte and the University area may be less expensive homes with higher cap rates.
Our advice is to get into the real estate market as an investor with a qualified partner. Be aggressive and team up with someone who knows the area and understands the sales and rental markets. We have done this for investors for a long time, and we have a very high success rate, so if you have any questions or need any help, please contact us at Carolinas Metro Realty.