Spring Into Investing 2024

As spring approaches, this is a great time to prepare for future investment opportunities in real estate.

There are three general categories for real estate investments: long-term rentals, market appreciation, and fix & flip or spec houses. Long-term rentals are often referred to as holdings and bring in monthly income. But, except for required repairs, money spent on improvements will not be deductible until the year you sell the property. A separate bank account will be required for security deposits and a second funded account for unexpected expenses is highly suggested.

Market appreciation requires time -- often years and is completely out of your control, while flips require investors to have funds available, and to move quickly while accurately gauging the market.

Defining and understanding your investment goals is a smart first step toward long-term success.

Whether you hope to invest in your own community or a different state, get to know that market well. Learn everything you can about market trends and projections for the coming year.

Then, familiarize yourself with the potential tenants or buyers likely to have internet in your property. Are you targeting the single-family occupant (SFH) or the low-maintenance townhome and condo community? Getting a handle on the democratics of the future occupants will inform how you improve the property and how much money will be needed to bring the property up to the market standards. Such updates usually include the kitchen and baths, and professional inspections can help guide you through other needed improvements.

One of the most commonly requested types of single-family homes (SFH) has a 3 bedroom/2 bath configuration, while a commonly requested townhome often have a garage and enclosed fence. Residents looking for condos often hope to find a property rich in amenities like a community pool or gym.

My first property was a single-family home (SFH) in Charlotte, NC. It cost $111,000. Not only did I not have the money to purchase the property, I also lacked the downpayment, and closing costs. Fortunately, I borrowed the required 20%, got my first mortgage, and took on a housemate to make ends meet. After living in the property for two years, I turned the house into my first investment property. I made enough each month to cover my expenses and eventually sold the property for a slight profit. While I didn't make a lot of money on that first sale, I learned the investing formula, which was priceless.

There is a dearth of available properties in many markets right now, but you can make the most of these remaining winter months by preparing financially. Use the time to take a good and honest look at your budget and be realistic about your likely return on investment. There are many ways for investors to secure financing that may not be considered by or even available to traditional home buyers. It can be helpful to build a reliable team by connecting with an attorney and closing office, RE professional, contractors, and investment loan specialists to decide what is best for you. Read all documents before signing and keep a keen eye on repayment dates and interest rates. They can add up up quickly.

Use this time before you sign, to prepare for your investment journey.