6 Tips for Real Estate Investors in the Lowcountry

Sep 20, 2019

Real estate can be a lucrative field for investors who work hard, do their homework, and build solid reputations for honesty and ethical conduct in their industry. Real estate investors take risks to earn profits from appreciation, cash flow commissions, and ancillary income but must balance them against taxes and insurance, depreciation, maintenance and repair costs, and unforeseen threats.

Wise real estate investors are generally rewarded, so if you’re planning to enter the field, know the basics before you start.


1. Buy Low, Sell High

Wholesale properties generally move at a discount because they’re purchased in bulk. Investors with the capacity to take on several properties at once can multiply their investments when they buy, improve and sell wholesale properties.


2. Cash Flow is King Early On

Beginner real estate investors need to prioritize cash flow lest they find themselves underwater right at the start. Consider buying properties that produce a steady stream of income until the business has significant assets. Remember that the mortgage isn’t the only cost. Vacancies, property management fees, and maintenance and repairs can devour a big chunk of the profits. In the Lowcountry, add the threats from hurricanes, tornadoes and flooding damage.


3. Mind the 1% Rule

Speaking of cash flow, the controlling rule of thumb regarding income-producing properties is that rental income should account for 1% of the purchase price in order for the deal to make financial sense. Thus, before making a $250,000 investment, determine whether it will produce $2,500 in rental income right away.


4. Acquaint Yourself with the Tax Implications

Uncle Sam and the Palmetto State both offer tax incentives to private investors to create housing, but local municipalities collect much of their income from real estate taxes. Make sure you are familiar with federal and state depreciation rules, business deductions, mortgage interest and other deductions, and with local real estate tax policy.


5. Consider the Best Street/Worst House Rule for Residential

Veteran real estate investors know that location is the key to real property, even more than the actual property itself. Individual properties are infinitely easier to improve than a whole neighborhood. That is why investors know purchasing the worst house on the best street is a great strategy and buying the best house on the worst street is a prescription for loss.


6. Get the Financing Appropriate for Your Project

Investors seeking to add value to a property and then flip it require streamlined financing they can leverage quickly. Wholesalers often need transactional financing before going to the consumer market. Commercial real estate investors often look to bridge loans to close their deals. In every case, it is critical for investors to find the financing source that works best for them, and particularly in non-traditional transactions, that’s not a bank or ordinary mortgage lender.

Coastal Equity Group is a professionally managed boutique investment firm providing real estate-based loans to borrowers in need of non-traditional financing. Because we are small and private, we can move quickly through the underwriting process and structure loans more creatively than conventional banks. Based in Charleston, South Carolina, Coastal Equity Group also lends in Kentucky and Florida. Apply for a loan today.

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