San Jose Property Management
Property Investing & Property Management Tips
Since the 2008 U.S. housing collapse, home prices have stayed low due to a market correction. As the economy continued to slide into recession, the Federal Reserve predictably held interest rates low. This reduces the borrowing cost for both consumers and businesses, with the idea being that they will invest the easy money and stimulate the economy. While the U.S. economy is technically out of recession, for many Americans the economy is still sluggish. Essentially the U.S. economy has acted like a truck that is trying to pull a boulder uphill with a sputtering motor.
Because of such conditions, home values have largely held flat and interest rates have been kept low. There are many reasons for this but part of it has to do with the slow rate of recovery. However as a property investor or someone who is considering purchasing property, right now is still an ideal time to buy into the housing market. San Jose Property Management suggests you before doing so it is best to follow some basic advice in order to avoid costly mistakes.
First of all it is critical that a person invest in real estate for the long term. Many people incorrectly assume that they buy and sell properties after a little bit of development. That might work in the popular board game Monopoly but it really isn’t true to reality. It was this sort of thinking that helped push the U.S. into recession in the first place. A property owner needs to understand that property is a capital asset that intended to be held for the long term. It is far better to own a property, rent it, and then maintain it over a lifetime with San Jose property management instead of buying and selling properties on a regular basis.
That leads to the second big tip: purchase cash flow positive properties. Evaluate the use of the property and see where it can generate cash. Sometimes a property can be a rental home with San Jose property management. Other times a property might have a house but some buildings that can be used for storage. Would someone be willing to rent those buildings? It is these sorts of opportunities that a property investor must scout out. For those investors who are buying residential properties, sometimes it’s a really good idea to buy a property that your family can live in for a while. Then when you want to get to into a nicer home, the old property can be rented at that time.
It is also important to be able to recognize a scam. As the old saying goes, “If it is too good to be true, it probably is.” Never disregard this wisdom. Instead take the time that is needed to properly educate you prior to buying an investment property. Make sure to buy properties that are in good shape and do not need a lot of repair work done to them. It is also important to avoid buying properties that are located in high vacancy or declining cities. Not only is there a risk of crime, but also the financial risk of declining home values.
It is best to start this young but before you are settled in. The younger any person starts investing, the more financially successful they will be. Since properties are assets that can generate both cash flow and equity, they are a sound investment strategy. It is important to remember to maintain conservative expectations about how a property investment will perform. Many people did not have proper expectations prior to 2008 and lost a lot of money because of that. It is better to maintain conservative expectations and focus on having a stable debt to income ratio and find properties that can be rented out.
Try to avoid buying prized properties that may be overvalued or located in a bad area even in popular cities like San Jose. Even if a house has a swimming pool and a fenced in yard, it can still a bad buy if it turns out there is a lien against it. Instead focus on desirable yet moderately priced properties that can be turned into rentals. This will generate cash flow and maintain property value through occupancy.
The final piece of advice is to remember that things will go wrong. No one can predict the future and plan for every possible setback. Renters may vacate early without paying their rent or worse squat on the property. Even with San Jose property management, criminals may damage a property, and banks may increase the cost of borrowing by raising rates. Of course a city assessor may visit and property and decide that the owner isn’t being charged a sufficient amount of property taxes either. The investor must learn how to take all of these disruptions in stride. Every investment is subject to risk and that includes property. However most people do fine when investing in property.