Buying Investment Property Financial Independence

CONSIDER THE FOLLOWING statistics: According to the Social Security Administration, by the age of 65, 95 percent of the U.S. population is unable to retire financially independent.

If you already own a second home or investment property, odds are that you’re well on your way to becoming one of the top five percent in the country that will be able to retire financially independent. Although the statistics are staggering, they make absolute sense. If you take a serious look at what asset a majority of people will rely upon most when it comes time to retire – you will find that it would be there home. Surprisingly, not many people consider investing in real estate when planning for their retirement, their future, and their childrens’ education costs. Sadly, even as the second home market continues to boom, many people still do not consider real estate as part of their financial portfolio – until it’s too late.

With an appreciation rate far more rapid than any other U.S. industry, the real estate market is a viable resource for building wealth. Real estate has always been one of the safest, most profitable investments. One reason is due to the fact that real estate is a limited asset with unlimited demand. In addition, many people are attracted to the concept of leveraging: making money with borrowed money. Who wouldn’t want to use the banks money to make money? Banks are always ready to part with money (loans) for real estate investing because unlike other forms of investing, real estate is a tangible asset.

It’s also important to keep in mind that when it comes time to sell, a well-leveraged investment property will have a return that far exceeds the initial down payment. In addition, if you choose to rent it out, your tenant is paying down your mortgage; essentially buying the investment for you.

When looking to buy your next property, there are a few things to take into consideration in order to reap the rewards of a wise investment First, consider the location – make sure you purchase a property in an excellent area where many people want to live or recreate. Will you be renting it out to cover the mortgage? If so, make sure you purchase in an area that has a healthy rental market. For example, if you purchase in an area of the country that boasts year round warmth – you are guaranteed to find tourists willing to pay for a ‘place of their own’ that offers resort-style amenities with nearby access to shopping, restaurants, golf courses, beaches, recreational spots, etc.

Identify your long-term and immediate financial goals – do you have young children who will require savings for their education, or are you looking to retire sooner rather than later? Such questions should have a huge impact on your decision. Make sure the whole family is on-board - and if you can – make it a family affair. Find out which parts of the country have the most stable economies, consider cities with state universities, low risk for natural disaster, and find out about tourism. Research national appreciation rates to target the best cities for investing and, if possible, ask others who have purchased a second home in the area how they feel about their investment.

After your second home or investment starts to appreciate, you will start to feel more confident and real estate savvy. It’s always best to buy in a buyer’s market and sell in a seller’s market – so when you own property, stay abreast of the local and national real estate trends. Stay in touch with your Realtor and have them keep you updated as well.

Finally, the most important thing you can do when you own investment real estate is to hold onto it for as long as possible. Therefore, when you are looking to purchase additional real estate, ask yourself if this is a place where you would want to live or visit? Ten to 15 years is an ideal length of time to hold onto a good piece of property. If you take into consideration location, economy, weather, tourism, and the quality of the home itself - you will soon reap the rewards of a well-executed, thoroughly researched purchase that will result in a very healthy return on your investment.

Sharon Rizzo, President, and Santo Rizzo, CEO, of The Rizzo Realty Group, are national real estate investment experts with over 30 years experience marketing and selling real estate in the primary, secondary, and investment market. To find out more about their investment opportunities, please visit www.rizzorealtygroup.com.