Investing in real estate, especially in Austin, can be a smart decision, but you have to be prepared and ready for the changes that can hit the market. With the uncertain times that we face, it’s offered some opportunities for investors to find great homes in sought-after neighborhoods that they can renovate and market to renters. If you’re curious about what it takes to be an Austin real estate investor, we have some tips and ideas to consider before jumping in.
Understand the market and how it’s changing.
The most important step in any financial decision is to do your research. Meet with a REALTOR® that specializes in real estate investing and can walk you through the neighborhoods that are doing well for investors, the up-and-coming neighborhoods, and the areas that homebuyers are looking to move. This will also be crucial in helping you and your real estate agent decide where to focus your search for properties.
Analyze your finances.
Real estate investing isn’t for everyone, and it can come with a heavy price tag when unexpected issues arise. You need to be secure with your personal finances and feel ready to take on income that will have costs associated with it. Ask yourself:
- Can the money in your savings cover three-six months of personal expenses?
- Do you have an account set aside for emergencies?
- Are you in a stable work situation that guarantees you’ll be receiving a paycheck every month?
- Do you have any financial assets or burdens that may cause your financial situation to change?
- Can you access the funds needed for down payments, repairs, maintenance, and mortgage payments easily or will it require selling assets?
Weigh the risks as well as the rewards.
Like everything else, there are pros and cons to investing in real estate. Make sure that you are prepared for both and have trusted advisors in your corner to help you with anything that may come up. Your risks include:
- Troublesome tenants – This includes tenants that receive loud complaints, don’t keep up with cleaning/maintaining the property, or tenants that pay rent late or not at all.
- It can be costly to get started as well as to get out of an investment property.
- During downtime where you have no tenant, you’ll have to cover all expenses yourself.
On the other hand, the rewards include:
- Increased income – as the real estate values increase, so can the rent you charge new tenants.
- Real estate tends to be more stable than investing in stocks.
- The interest you pay on an investment property loan is tax-deductible.
- You’re creating equity that you can tap into.
If you’re considering investing in Austin real estate but aren’t sure where to start, the Sage Wilson Property Group can help. We understand real estate investing, and we’ve helped many investors build their property portfolio. Contact our knowledgeable team today.