Smart strategies net higher returns - buying a rental property can be a wise investment

 

Part 1 of 2 series

 

HONOLULU ADVERTISER September 25, 2005

BY LISA SCONTRAS

Custom Publishing Group

 

News Flash: Investing in real estate does not mean throwing your money willy-nilly at any deal that comes your way and waiting for the cash to come rolling in. If that is your plan, skip to the travel section and book the next flight to Vegas.

 

If, however, you want to become a serious investor, there is a method to the madness that will allow you to understand how to make good real estate investments — no matter what the market is doing.

 

Step one: Get a good Realtor to advise you. 

A real estate professional has built a business around educating clients on market conditions and they know what works. No doubt the flipping scene has been quite profitable for speculators recently. But because flippers buy low and selling high, quickly in a rising market, there has to be enough potential appreciation left in a property to make that turnaround profitable. There may be enough time — or maybe not.

Still, there are other ways to make money in real estate besides buying low and selling high. One way is by buying rental property.   With 18 years in the real estate business, Prudential Locations agent Mary Robb estimates that nearly 25 percent of her clients are investors.

Non-Hawaii buyers make up 12 percent of real estate sales. Here is the breakdown:

 

“More and more people are willing to step up and invest in real estate — to round out and diversify their portfolio,” she says.

 

According to Robb, many are making these investments in condos. When asked where, she replies, “Many of them are purchasing in town or around the university — where the industry is there to support the rental market.”

 

Can you afford to buy a rental property at 2005 interest rates with an eye on 2010 rental income? An negative-flow investment today might very well net a handsome positive-cash flow down the road — possibly to supplement retirement income.

 

Robb says resort areas are good, as well. “It’s just a different clientele — resort areas get short-term renters. But some people like these investments because it also fills a desire of theirs to go a live there for part of the year or full time once they retire.”

 

Robb works with each investor differently to meet their needs, both short-term and long-term.

 

“Bottom line is that real estate is a very solid investment. You just need to be able to ride out any down cycles.”

 

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