Things To Keep In Mind When Searching For An Investment Property
1. What is your long term plan for the property? This may seem obvious, but make sure you know what your goals are. Do you plan to turn the property into a rental? When do you plan to sell the property? If you plan to flip it and sell the property again quickly, how long will the renovations realistically take? When it comes to investing, especially if it’s your first investment property, know what the plan is.
2. What is the rental market like in that neighborhood? The last thing you want to do is buy a property in an area that no one wants to rent in. Consider the things your tenant would consider: how close is it to grocery stores, what are the noise pollution levels, what good restaurants and bars are close by, etc. Know what similar properties are renting for in that neighborhood. Renters will be comparing the rent prices, so you should be too.
3. Who are you hoping to rent to? Who you want as renters should be in the back of your mind when looking at property. Families, especially ones with young children, are more likely to want homes with yards and that are close to schools and parks. College students, on the other hand, are probably more inclined toward properties near their campus and that have numerous bedrooms. This goes back to neighborhood as well. It’s going to be tough to find a nice family to rent your property on a street filled with college students.
4. How far away will you be from the property? Whether you are renovating or renting, distance between your investment property and where you are living is something to consider. How closely will you be working with your contractor? How often do you want to be running to the property if you are trying to show it to potential renters? What happens if there is a maintenance emergency? If you are renting your property but live quite a ways a way, it may be worth considering a professional property management company who can handle the smaller problems as they arise.
5. How much work are you willing to put into a property you don’t plan on living at? Whether you plan to turn around and sell the property right away or rent it for years to come, chances are you plan to do some work. Make sure you are realistic about how much work you plan to do and what those costs will be before purchasing a home as well as the ongoing maintenance.
6. What is the potential for resale value? Visit with your real estate agent about what you are looking at for resale values. This is their area of expertise and can give you a much better idea of what neighborhoods are up and coming and which are on the downhill slide. They can also point out things about a property you might otherwise forget to pay attention to, such as how busy the street gets during rush hour.
7. Do you have your finances in order? There are various options when it comes to financing your investment property. If you haven’t already, start visiting with professionals in the field such as financial advisors and lenders. However, make sure you don’t fall into pitfall of getting hung up on just one aspect of your financing, such as the loan. Remember to include all short term and long term expenses, such as the costs of repairs, association fees, and utilities. It’s also good to remember that property taxes go up when you own property that is not your primary residence. The more prepared you are for these expenses, the more efficient your property search can be.