4 dangers of property rollover

money, finance, mortgage

If you have recently purchased property for investment purposes, you are in good company. According to the latest reports, 25% of these purchases are made by those who plan to use the property for investment purposes only. If you are hoping to turn a property around, there are four things you need to know that can lower your bottom line.

1. Real estate taxes. Save the property for several years and you may face a sharp increase in property taxes, especially if your taxes are revised during this time. In some hot real estate markets, taxes have nearly doubled in just 5-6 years.

2. Repair costs. You may have purchased a “fixing top” at a bargain price. Once your project is complete, will you be able to recoup the costs and make a profit, especially if the value of your renovated property is higher than in your area? Also, will you be able to withstand the adjustment in property values?

3. Insurance and mortgage costs. You will pay more for homeowner insurance if you do not live in the home and have tenants. If you finance real estate, you know that your mortgage rate is higher as well.

4. Pressure on rent. A rental-saturated market will mean that the rent you can charge will be less than what you expected to receive. In some markets, you need to obtain a special license to become a landlord. In other markets, legal tenant rights mean it can take a long and costly struggle to get rid of a bad tenant. Will your investment reduce lower income when combined with additional costs?

Of course, you can limit your risks [and costs] by doing most of the upgrades yourself, challenging the excessive property tax hike, and finding a reliable and reliable tenant for you. Moving a house is not easy, but with a lot of courage and determination, it can bring you big profits.