7 Things to Consider When Buying an Investment Property
Having an investment property can certainly be an asset. It can be a passive source of income and the value of property can even appreciate over time. There are also its share of risks - vacancies, bad tenants, and property damage. Here is what you should know before you begin investing in real estate.
1) Reflect if it’s the right time for you.
Are you able to make this big purchase and still cover your existing financial obligations? Make sure a mortgage lender is willing to lend you money for this purchase and consider how many months you can support this investment if there is trouble finding a tenant.
2) Location, location, location.
We know it’s a cliché, but for a good reason. You don’t want to purchase a beautiful home somewhere unappealing.
3) Learn from the experts.
Speak with investor friends, your bank / mortgage specialist and a realtor. These experts will know the market and will better provide you with suitable options.
4) Decide what to do with it.
Will this simply be a property to flip or are you looking for long-term rentals? Generally, we recommend having a long term approach to real estate investments. If you sell a real estate investment too soon, the high transaction costs may reduce your gains significantly.
5) Draft a budget.
How much are you willing and able to invest? Consider expenses such as property taxes, maintenance costs, condo fees, mortgage payments, insurance even.
6) Calculate the ROI when you view properties.
There are online tools, such as investment property calculators, to give you an idea of what you could potentially get back.
7) Offload the day-to-day with a property management firm.
How hands on would you like to be with your investment? If overseeing the daily operations of your property isn’t for you, then consider a property management company. They have the expertise to screen and onboard tenants, and jump into action when needed. They make sure you and your investment are protected.
Learn more about our suite of services at CLAVIS PROPERTY MANAGEMENT below!