Investment properties are an option for people who have some extra cash flow or saved up money where they would like to earn a return on investment. Even though the cost of homes have indeed increased, you may still have the opportunity to earn a great deal of money. There are a lot of things that you need to take into consideration. Some of the things you need to think about are what timeline do you have to work with? How much money do you have to spend? With how much money you have to spend, would you have to borrow anything from anyone? How much money are you hoping to make from the investment? You can never ask too many questions, especially when it comes to making an important decision like this!
If you are still not confident if this is the right route for you, we have a simple way for you to look at it. To start, with the amount of money you have to invest, can you purchase a home with just that amount of money? Or would more funding be needed in addition to what you have? If more money is needed, will what you are expected to make be worth the investment? An important factor to look at is if the home does not sell immediately, will you have any financial issues because of it? If you would, an investment property may not be the best avenue for you. With the unpredictable market of today, it is not guaranteed how quickly a home would sell.
Something else you should keep in mind, that the majority of people may not be aware of, is the fact that the interest rate of second homes is usually higher. With taking this into consideration, would you still make a significant amount of money for the investment to be worth it?
If after asking yourself these types of questions and you think an investment property is a good idea, we would recommend you speak to a professional. We would be happy to talk to you about your mortgage options on an investment property!