Thinking about Investing?
Buying an investment property can be a great way to create another source of income, but it also take care and practice to secure one’s financial interest. If you are thinking about investing, read this article by Katie Conroy for tips for buying a property.
Read These Tips Before Buying Your First Investment Property
For anyone who is looking to start developing their investment portfolio, getting into the rental property business is one of the best ways to do it. When done smartly and carefully, buying an investment property can yield high returns and set the stage for future investments.
The catch, however, is that in order for it to be a successful experience, you have to approach it smartly and carefully; otherwise, you can end up wishing you never bought the property. If you’re flirting with the idea of purchasing your first investment property, this article will provide useful tips for choosing the right property and managing it once you own it.
Choose a Good Location
Where your rental property sits is as important as any other factor of the investment process, because it influences nearly every aspect that can make you money. For instance, renters will often choose a less desirable property in a great location over a more desirable property in a bad location, especially if it provides convenient access to local amenities and activities. Also, if your property is in a good neighborhood (or one that’s on the up and up), it stands a better chance of value appreciation, which means you earn more money over time. Moreover, if your property is in a good location, Coach Carson states that it becomes much easier to market.
Figure Out What You Can Afford
While you want to pick the best location you can, you have to ensure you can actually afford a property before you buy it. The simplest way to determine whether you can afford a property is to perform a cost-benefit analysis, which may require some research. According to Zillow, find out what the average occupancy rates are for similar homes in your area, and estimate the operational costs of owning the property (e.g., taxes, insurance, maintenance, utilities, etc.). Then, determine what you will charge for rent. Once you have all the numbers, compare the costs with the rent income you can expect, and you will have an idea of your typical cash flow.
Take Care of the Property
Once you own a property, one of the most important tasks is to keep it in pristine condition. This means keeping it clean, as well as performing routine maintenance and any necessary repairs. These kinds of duties can prove stressful, which is why many landlords choose to hire a property manager to carry some of the load. As Great Jones points out, it’s essential to find a rental property manager who will provide support — day and night — to you and your tenants.
Put in the Sweat Equity
Along with hiring a property manager, you may want to plan on putting in some work yourself, because it can save you a good bit of money. For example, if you notice any repairs that can be done fairly easily, go ahead and take care of it. This could include anything from recaulking around a countertop to fixing a broken drawer handle to patching a small hole in the drywall. Also, look for any part of the property that could use refreshing, such as a room that needs painting, an appliance that needs replacing, a furniture item that needs restoring, and so on.
Purchasing your first rental property can be an ideal introduction to investment, but it’s a big commitment that should be done with good decision making. Pick a property in a good location, and make sure it can produce the cash flow you’re aiming for. Make sure the property stays in good condition, and consider hiring a property manager to help you with various tasks. Finally, don’t shy away from putting in some work yourself, as it will ultimately pay off.
Thank you to Katie Conroy for allowing us to share these helpful tips for investment properties. If you want more from Team AGC, THE Northern Virginia Real Estate Team, you can view our latest posts here, or check out our Facebook page!