Are you ready to buy an investment property? Here are some things to consider.
1. Location, location, location. We've said it before, and we'll repeat it. Invest in the best place you can afford. It will determine the kind of tenants you attract and how much rent you can charge. A property in a desirable area will also appreciate more over time and be less susceptible to the ups and downs of the real estate market.
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2. Don't go overboard when fixing an investment property. You don't necessarily need granite countertops and stainless appliances. After all, you'll get some reasonable wear and tear when the tenants move out. In addition, most renters are happy with light, bright, and clean units.
3. Forget about flipping. Real estate today is a buy-and-hold investment for at least five to ten years. You'll face considerably more risk with a shorter time frame. Although your rental will undoubtedly appreciate over the next 20 years, the next few years are anyone's guess.
4. Think long-term. For most small investors, long-term ownership makes the most sense. You'll have plenty of time to ride out any swings in the market, and your rental income will be an excellent supplement to your day job. Historically, real estate has been an excellent investment, always appreciating a few points over the inflation rate.
5. Be prepared to have cash on hand. These days, buying a non-owner occupied property requires at least 25-30% down.
6. Calculate the cost of ownership. This includes all the expenses of owning and managing an investment property, not just mortgage payments. Typical fees include property taxes, insurance, utilities, maintenance, vacancies, and repairs.
7. Look for a property for what it can be, not what it is. Buyers with imagination can look past the cracked paint and overgrown landscaping and score a great deal.
8. Hire and pay skilled workers to do your renovations. Start collecting recommendations for electricians, plumbers, painters, and contractors.
9. Always screen your tenants. Run a credit check and call old landlords. Ask if they paid the rent on time, what condition the property was in when they left, and if they caused any problems with the neighbors.
10. Read up on your rights as a landlord. Learn about the eviction process and other potential issues to do things right, saving time and money.
11. Carefully consider all options. Generally, buildings with 3-4 units or duplexes pencil out best, followed by single-family homes with three bedrooms. Some investors find it best to buy a duplex and move into one of the units.
12. Enjoy the advantages of your investment property. When managed correctly, investment properties are a great source of passive income now and when you retire. Take advantage of fantastic tax benefits to make your investment pay off.
Reprinted with permission from RISMedia. ©2015. All rights reserved.
Get in touch. Contact us today for information about all Treasure Coast area homes for sale, or call us at 772-678-1600 to learn more about homes for sale on the Treasure Coast.
