Main Reasons an Income Property Is a Great Investment

Income Property Is a Great Investment

There can be a huge probability that despite wanting to get a house you are not enthralled by the idea. If the idea of buying your first house is not exciting you then you should consider the alternatives and go for the investment property. There are several reasons due to which people are turning more towards investment property then taking the conventional route and buying their own house. If you are not fully convinced by this idea then the points and reasons mentioned below will help you to a great extent.

Reason #1: Home Values are Higher than Rental Properties

The budget can be your first and foremost issue which can force you to settle for less. There can be a high probability of this case because the market is always soaring with prices. Getting the property for the first time can be daunting due to the home values. There is a constant increase of 10 percent in home prices. There has been a high cost, labor shortage and high demand with which the homebuilders are suffering from.

There have been several permits and other zoning regulations that hinder the pathway of many builders. Several middle-class families then struggle to afford the homes which could, in essence, satisfy the demands. If the real estate will continue this trend then the economy will maintain the levels it currently has.

Reason #2: No Interest Rates Fluctuation

The other reason for not buying the first property is that interest rates are low. If you are aware of the housing market crash of 2008 then you will also be aware that gone are those days where easy and quick loans were easy to get. There are several factors which you will have to consider when expecting the interest rate. You need to see that what is your credit score, the down payment amount and debt to income ratio. These factors will directly impact the interest rate for the properties.

Down Payment Amount for the property

Unlike in rental properties, the buyers, in this case, are putting down about 5 percent which also has a special monthly cost attached to it. If you are someone who is looking for the property investment then mortgage insurance is not available.

High Credit Score

When shifting from rental properties to the owned property you also need to be aware of the credit scores. You might already be aware of the fact that banks do see the background and whether there are strong borrowers or not. If you need a rough estimate then borrowers who own a credit score above 740 are not much of a risk for the lenders. This credit score makes you qualify for the low-interest rate but if your credit score is below 740 then you need to worry a little as your interest rate will shoot up. This is not only limited to banks but even the investors are looking at the risk versus return both on the ROI and investment.

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