4 Considerations When Buying an Investment Property
Purchasing real estate has been a profitable option for investors for a very long time. Many investors have made hundreds of thousands of dollars (in some cases millions) by purchasing properties, building equity, and then selling for a profit.
Here are four key considerations when deciding to invest in housing:
Purchasing a property and renting it out to cover the mortgage may seem like an attractive opportunity, but as the old saying goes "don't bite off more than you can chew." One of the most common ways to lose money in an investment property is to fail to rent the property out and then not being able to afford the monthly payments. Try to budget so you can afford to pay the mortgage on a monthly basis even if you can't rent it out (due to some unforeseen circumstance).
Location is one of the most important points to consider when purchasing a property for investment purposes. Look for nearby rent-drivers, such as colleges/universities, public transportation, highways, and other attractions. Of course, the better the location is, the more expensive the property will be.
3) Condition of the property
Don't let the cosmetics of a prospective property put you off. Put on your investor hat and look at everything with a dollars-and-cents point of view. Ask yourself, "What can I do to improve this place?" or, "How will adding this or fixing that impact the value of the property?" Plus, if a property meets most of your criteria but isn't the prettiest looking home on the street, you may be able to get it for a lower price.
4) Do your research
Study the market, consistently review the stats and look at the properties available in your target area. You never know when the right property at the right price will present itself.