The Move-Up Investor

January 15, 2011 by · Leave a Comment 

Of all types of Investors, the Move-Up Investor is the most near and dear to my heart wallet. All joking aside, I am one of the many Move-Up Investors out there. At one point in time, my rental property was my primary residence. Now, it is an income producing investment. The good news is that this is easily repeatable and savvy investors are doing it all the time.

In this post we will quickly discuss the characteristics of the Move-Up Investor, how to analyze your current home as an investment property and then find the deals out there for your next home.

Let’s first outline the characteristics of the Move-Up Investor.

The Move-Up Investor typically:

1. Has never owned an investment property. (You have to start somewhere!)

2. Owns a home that can be rented and cash flow.

3. Can qualify for a loan without selling their current property.

4. Can repeat the move-up strategy to build long-term wealth over time.

Analyze your current property as an investment property.

1. Begin by removing any emotional attachment to the property. Treat it as if it were a commodity, not a home. You have to be as objective as possible.

2. Figure out exactly how much it costs you to own this property. Payment, Taxes, Insurance (landlord, not homeowners).

3. Research current rents for the area and find the median rent, not the average. It is best to be as conservative as possible here.

4. Figure out cap rate and cash flow for your property. Use the below chart for some help.

Now comes the fun part. Let’s find you your next home!

The first conversation you need to have is with a lender. Figure out how much home you can afford without selling your current home. Remember, “Move-Up” Investor doesn’t mean you have to buy a bigger, more expensive house. I have a few clients who own multiple homes in the same neighborhood.

Take a look at a few of the properties below for move-up deals in our current market. (If we’re dreaming, we might as well dream big!)

Each property selected below is only an example of what’s available. Prices listed below are just asking prices. Estimated market value is based on comparable sales in the area and projections are deemed reliable, not guaranteed. The idea here is to purchase BELOW Market Value in a down market.

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