Investing in real estate can be overwhelming, especially if one is new to the market. If you’re looking to invest in property, here are a few tips on navigating the Palm Beach Gardens real estate market.
Determine your goal
There are several reasons for investing in real estate – some look for long-term investments, which means holding on to a piece of property for years until its value increases significantly. Others buy properties to flip and sell in order to make a quick buck. Trading up is another option in which investors sell a piece of property and use the money to buy another one.
Knowing your objectives for investing in real estate will narrow down your property options to a considerable degree and allow you to make a more careful selection.
Location is key
When investing in real estate, location is always key. Buying the cheapest property does not always translate to a good return on investment; in fact, it can be risky to invest on a property located in a neighborhood that might not see an appreciable increase in value anytime soon.
If you’re looking to invest in Palm Beach real estate, look to locations where growth is steady or development projects are planned or ongoing. If you want to hedge your bets, waterfront properties are always an option.
Track trends in surrounding areas. To identify future investment opportunities, check for an influx of people looking for housing in certain areas and monitor the annual growth rate over time. Expect different demographics to have different needs – top schools for families with children, healthcare facilities for older people, and so on.
Carefully consider multifamily homes
Obtaining financing for multifamily homes may have a similar set of eligibility requirements as buying single-family homes – but things change the moment you buy a multifamily property with 3 or 4 units. Prepare for higher down payments and credit scores. Assess the benefits of available loans – conventional, VHA and FA, and commercial. Multifamily homes are one of the most popular housing types today,
Watch out for hidden liens
Liens – or legal claims against a piece of property – can ruin a deal, especially if one finds out about it when it’s too late. To avoid this, check with the Palm Beach County property appraiser’s office and see if there are past liens that haven’t been resolved. Also check the Palm Beach County official court records for lawsuits or cases involving the property, as well as the Florida Department of Revenue for any outstanding claims against the property you’re interested in.
Understand the numbers
Before you invest, dig up data that matters. Look into census data such as population growth, average household income, and unemployment rates. Look at real estate trends such as housing inventory and vacancy rates to see how well the real estate market is doing. All of these will give you a snapshot of the market and help you assess its potential as a real estate investment. The data will also allow you to project realistic estimates for rent, should you plan on turning the investment into a rental property. When crunching numbers, it’s prudent to go for conservative estimates.
Consider trading up
If you wish to sell your home and use the earnings to buy property, you might want to utilize a 1030 deferred-tax exchange. The 1031 exchange allows you to delay paying taxes on capital gains when you sell an investment property in order to reinvest the proceeds in another property. While this sounds attractive, a 1030 exchange requires higher minimum investments as well as holding time. See if you can abide by the restrictions that come with a 1030 exchange, such as being unable to deduct operating expenses like homeowner’s association fees, loan payoffs, and other lender charges. Depreciation is also taken into account when calculating capital gains. To make sure you do everything right when trading up, work with a Palm Beach Gardens real estate agent.
The Telchin Group, LLC is the #1 broker serving top-tier clients in prestigious Florida communities. If you want more tips and information on investment properties, check out their blog here. If you’re looking for an investment property in Palm Beach, call 561.301.0249 or send an email here.