Determining a “Good” Deal on Investment Property
Aug 09, 2011 |
Now may seem like a good time to snap up some cheap housing or a foreclosure as an investment property. But there’s some calculations you have to do first before to make sure that your returns are worth it.
According to Zillow, there are really two things to look at: operating positive cash flows and long-term appreciation. Of course, that’s in a normal market. Right now, you probably don’t want to rely too much on appreciation.
There is a way to calculate returns so you can compare property to other investments where you could place your dollars. Zillow has broken down the way to compare a high-risk investment like real estate with the return on investment with CDs, bonds and stocks. Go here to see the calculations that you need to make before plunking down your money on a house.
Oh, and those beach houses and fancy condos that people like to invest in actually have low or negative returns. Instead, you should buy moderately priced properties.