About the author
Jeffrey S. Detwiler is president and chief operating officer of The Long & Foster® Companies, parent company to Long & Foster Real Estate, Inc.,
the largest independent real estate company in the United States, and Prosperity Home Mortgage. From extensive, neighborhood-level market
information to Long & Foster’s core services companies — providing mortgage, settlement, insurance and property management services in a
streamlined manner — Long & Foster offers the services necessary to make today’s real estate transactions manageable for owners and investors.
Buy and hold or buy and flip
If you’re focused on buying an investment property, you’ll
need to decide whether you’re interested in making some
quick money or want long-term rental income. NAR’s survey
showed that most investors last year were looking for
income, but some still prefer to ;nd a low-priced or distressed
property, make improvements and then sell it for a pro;t.
Now that there are fewer distressed properties, it can be
tough to ;nd a house that you can buy at a low price and sell
high, but if you work with a professional Realtor who knows
your market well, it’s a possibility. You’ll need a good idea
of the cost of home improvements and how fast homes are
selling in your area to evaluate a potential deal.
If you’re looking for rental income, you’ll still need to search
for a property with a reasonable price and then compare
it with market rents for similar properties. When you’re
searching for a rental property that will generate a good
return on your investment, look for features that appeal
to typical renters in your area such as access to public
transportation, recreational amenities or nightlife for a
condo or small home that will attract young people. If you’re
investing in an area that attracts families, check out the school
district, too. Evaluate demand for rentals in the area to be
sure you’ll be able to keep the property occupied as much
as possible. Some investors choose to work with a property
management company to do a background and credit
check on potential tenants, help maintain the property and
make sure the rent and utilities are paid. Fees for a property
management company’s services depend on how many
properties you own and are negotiable, but an article in
Northern Virginia Association of Realtors Update magazine
reported they typically range from 6 percent to
10 percent of the monthly rent.
Insurance considerations for your
When you buy a second home, you should also consider
home insurance costs, which vary according to numerous
factors, from the property location and to how often
it’s occupied. Tax treatment for second homes depends
on whether you’re using the home yourself or renting
it occasionally or constantly. Consult a tax advisor to
understand the implications of the purchase.
If you’ve made the decision to expand your real estate
investment portfolio, Long & Foster Real Estate o;ers
multiple divisions that can help you ;nd, ;nance and insure
your home, as well as a property management division
that can help you ;nd tenants and maintain your property.
Representatives of Prosperity Home Mortgage and
Long & Foster Insurance are available in most
Long & Foster o;ces in the Mid-Atlantic and Northeast
regions to assist prospective buyers with ;nancing.
Working with experienced professionals can make your
real estate purchase a worthwhile investment.
1. Based on November sales figures for 2014 and 2013, CoreLogic: “CoreLogic
Reports Home Prices Rose by 5. 5 Percent Year Over Year
in November 2014,” Jan. 6, 2015
2. Realtor.com® 2015 Housing Forecast
3. Report: Contrasting Real Estate with Comparable Investments, 1978 to 2004