Investing: 101 and Generating Passive Income

Investing: 101 and Generating Passive Income

Now more than ever is the perfect time to invest in real estate. We all know that the real estate market has its "highs and lows," but there is always one thing you can be certain about when you invest in real estate: its a permanent investment that can be utilized to your advantage in many ways in any market.

Purchasing a second home as an investment property is one of the most lucrative decisions a person can make. The general idea is to buy low and sell high, however, it does not always work out that way. When the market crashed in 2006 and investors did not have the chance to finish their renovations in time to take advantage of the ever-rising home prices, many lost their investments due to bad high risk hard money loans.

What these investors failed to do is take into consideration the fact that these properties can now serve as rentals at least until the market picks back up. The last thing a lending institute wants to do is initiate foreclosure proceedings as it is a very costly process and lenders are not in the business to resell homes. If these investors worked with their banks, most would come up with a solution where the investor can keep the house, pay the mortgage at a lower rate, and supplement his income with rental income.

Rental properties are an excellent source of passive income. Although, it is the landlord's responsibility to maintain the mechanics of the property, pay the taxes/ mortgage, and make sure it passes all necessary inspections depending on the county/ city it is located, typically the monthly rent you receive greatly outweighs these general expenses.

Before purchasing a rental property, you must be diligent and do your homework. Find out what the houses are selling for in the area so that you can try to buy as cheaply as possible, especially if you only plan to hold the property for a couple of years. Check to see what the average monthly rental income is for that particular neighborhood. Make sure you are aware of any required inspections/ codes you will be required to abide by prior to renting out the home. Finally and most importantly, hire a real estate broker who is well-versed with investment properties and has experience with his own investments. A well-versed real estate broker will be able to guide you through all of the above-mentioned steps and advise you on all of the details you will need to know in order to make your investment a sound one.

As lending institutions continue to be more strict than ever with their guidelines on lending money to consumers, the rental market continues to grow and rental properties are in greater demand than ever before. Even the cheapest rentals I come across in the least desirable areas are going for a minimum of $1,000/ month.

If you are thinking about purchasing a second home in order to supplement your income, do not hesitate to contact me so that I can advise you on how to get started.
Matthew T. Smoot-Your "Whatever it Takes" REALTOR®
The Exit Express Team
With over 7 years in the business I offer my clients the most comprehensive representation in Maryland. Not only am I a REALTOR, but I also hold a Broker's license, which is the highest and most specialized license a REALTOR can hold. Customer Service is my Priority, Selling Houses is My Goal! Contact me for any and all of your Real Estate Needs. Proudly Serving Baltimore County (Perry Hall Farms, Kingsville, Glenside Farms, Honeygo Village, White Marsh, Middle River, Essex, Timonium, Dundalk, Pikesville, etc.), Harford County (Amyclae Estates, Bel Air, Bel Air South, Brentwood, Brentwood Manor, Brentwood Park, Bright Oaks, Brook Hill Manor, Cedarday, Country Walk, Fountain Glen, Foxborough Farms, Glenangus, Glenwood, Greenbrier Hills, Hickory Hills, Homestead Village, Irwins Choice, Marywood, Stoneridge Point, The Estates at Cedarday, Todd Lakes, Forest Hill, Monmouth Meadows, etc.) and Baltimore City (Canton, Fells Point, Bayview, Highlandtown, Patterson Park, Hamilton, Hampden, etc.) Another superb colleague You can count on is Paul Gillespie