by Brook Walsh
on Friday, October 30th, 2015 at 7:52pm.
Investment properties can intimidating to the first-time investor. When done right however, real estate investment can be very rewarding, and a great source of income. There are several things to consider before purchasing your first investment property. The road to real estate riches is paved with obstacles which can affect your bottom line. Here are some of the things you should and should not do when it comes to purchasing investment properties for the future.
Do: Create a Plan for Your Investment Property
Are you ready to make the investment? In other words, do you have a well thought out plan in front of you? Creating a plan for your investment property can give you more of an idea on what needs to be done. You’re also able to learn whether or not you can afford this new investment. Have a solid plan, and make sure to have contingencies for any possible challenges and setbacks.
Do: Research the Neighborhood
The quality of the neighborhood will have an influence on the kind of renters it will attract. Check out and know the neighborhood you’re buying into. Talk to other renters in the area, as they will more likely give you their honest opinion about the pros and cons of their neighborhood. Desirable qualities in a neighborhood include access to good schools, low crime rate, parks, and shopping among others. You may be able to get a bit more out of rent if you’re offering all of the above, along with the home. Remember: happy renters are also most likely to become long-term renters.
Do: Assess your Finances
It's a good idea to assess your financial standing before diving into investment properties. This means being able to obtain financing, and knowing whether or not you have cash reserves on hand to cover your mortgage as well as other expenses like property taxes, repairs, and insurance. Speak with a mortgage officer and understand the options you have available to you. Your budget will also determine the type of property you will be able to afford.
Don't: Buy Until You're Ready
Every city has good neighborhoods, but not all properties are alike. Finding your ideal rental property takes a lot of research and legwork, in addition to a healthy financial standing. Keep your expectations in check, and don't make the mistake of underestimating the cost of repairs and maintenance. Investing in real estate doesn't start with the purchase of a property - it begins with a good financial standing, which allows you buy a rental property in the first place.