Investment Property: Making the Right Purchaseadmin
The first step in choosing the right Salt Lake City investment property is knowing why you want it, what you plan to get from it, and how to spot a good investment. Second, you must understand the process and how it works. Here are a few tips:
- Decide what type of property would work best
There are a number of investment property options, but condos, town-homes, single family homes and two to four plex’s are popular and quickly find tenants.
- Do your research
Finding the right property takes research. It’s important to use the right realtor who understands your needs. Contact me for a recommendation based on the type of property you are looking for.
- Determine your funding
Know what option will work to your advantage. Bank loans have rates that are reasonable and can be spread out over 15 to 30 years. It’s a great time to purchase investment property due to super low rates within the market, lenders becoming less stringent, and most loan institutions requiring only 15% down.
- Rethink your strategy
Purchasing a newer and bigger house for yourself while converting your existing home into an investment property can work to your advantage. You’ll have cheaper down payment options and can upgrade your living space. Your new house will cost more… but you will be making money from your rental property.
Once you get the property, it needs to be managed and maintained. Now is the time to decide if you want to use a property management company or manage the property yourself. You must factor in the time and demands of your current schedule to determine what’s best.
During the process, should I purchase property in my name or should I pursue an LLC?
This is a valid question. For some, it makes good business sense. Here are a few reasons why:
Creating an LLC will protect your assets, especially if you have a situation with a tenant and they want to sue. This will keep your personal assets from being at risk.
Having an LLC can help you reduce your taxes in a number of ways. Speaking to an accounting or financial advisor can give you more information to make the right decision.
Although setting up an LLC may be advantageous, there are also some disadvantages:
- Based on where you live, there are costs associated with having an LLC. Those costs include the yearly fees, and separate tax return fees.
- There are instance where your assets may not be protected from lawsuits.
- If you already finance a property, buy another under your personal name and quit claim it to an LLC, you may inadvertently trigger the “due-on-sale” clause of your original loan.
These tips will help you during the process, and can give you guidance on making those decisions that will make a difference in the way you approach your investment strategy. Speaking to someone who is knowledgeable in the field can assist you in the process to acquiring the best investments for you. Call me today to discuss ways to set up your retirement portfolio with a investment property.
Source: http://www.biggerpockets.com/renewsblog/2013/08/17/rental-properties-llc/, http://www.biggerpockets.com/renewsblog/2013/03/15/investment-property/