What to consider before you do

On real estate

Historically low interest rates help make real estate an attractive investment offering both cash flow and favorable tax treatment. But is a real estate investment right for you?

Before you decide to add real property to your portfolio, consider the pros and cons of investing in real estate.

While being an investor has its benefits, it is not without challenges, so it is important to do your research and be prepared to face any obstacles. The benefits of owning property include the steady income from rents, tax deductions, and the appreciation of property value in the long run.

In a low-inflation environment there is potential for equity gains in real property because home values rise with inflation. And who isn’t looking for a tax shelter that also pays the mortgage?

Low interest rates make it easier to run a positive cash flow and lock in an even better one as SoCal rents continue to rise.

On the other hand, maintenance expenses, vacancies and the occasional bad tenant are eminent risks.

Finding qualified professionals to assist with necessary services is a must. A reliable handyman and sharp property manager can handle most of the issues that will arise, keeping you actively engaged with your investment without headaches from tenants.

Good planning and organization is essential to maintaining and keeping track of all expenditures and property matters, particularly when it is time for your annual tax appointment.

Getting started

First, you will need a minimum of 25 percent down payment, and should get pre-approved for financing. The criteria for approving non-owner occupant loans can be tough, using only a percentage of market rents to offset the mortgage.

And it all starts with a good buy - location still being of premier importance for future appreciation, but other factors such as proximity to shopping, bus lines, or schools can enhance the rent potential.

Adriana Donofrio • Podley Properties Glendora (626) 926-9700 • adrianad@podley.com