Tips On Buying An Investment Property
Investment property is a great source of real estate income provided you choose the right type of property, and find reliable tenants. Residential rental property investments are a good choice for first time investors as they offer stable cash flow, property appreciation, passive income and leverage.
If you are a first-time investor, here are some pro-tips for buying investment property:
- Research: Define your goals before researching in order to have a clear picture of what you are looking for. Based on your goals, get as much information as possible about the area you intend to invest in.
- Features to Consider: The most important features to consider when choosing an investment property are the neighborhood, property taxes in the area, schools, crime rate, employment opportunities, scope for future development and amenities (parks, fitness centers, transportation, etc.)
- Amount of Rent: Determine the potential rent of your investment property. This should be an amount that is neither too high nor too low. To figure out the right amount of rent for your property, consider the actual cost of the property i.e. insurance costs, mortgage payments, property taxes and more. A rule of thumb in this case is that the costs of ownership (monthly) should never be more than the amount of rent.
- Financing: If you are interested in financing your investment, there are certain things you need to pay attention to in order to make the right financial choices. Before looking for an investment property, get yourself pre-approved for a loan. Research on financing options on your area and choose an option that suits your needs and saves your time and money.
- Hire a Property Manager: Consider availing the services of a property manager if you are a first-time investor. Property managers are well-versed with the process of making investments and everything it encompasses. They may provide valuable guidance regarding various aspects of investing such as marketing property, determining the right price, assistance with maintenance, paying bills on your behalf and more.
- Choosing Property: Choose an investment property that will attract long-term renters and offer consistent cash flow e.g. duplexes. Duplexes offer property owners the choice of living in the building while renting out the rest of it. Owning a duplex is considered as one of the most lucrative options for property investors as they have a higher resale price, are easy to manage and offer a high return on investment.