On the off chance that this can be your first time venturing into the world of investment properties, it’s typical to feel a bit overwhelmed by the procedure. There is a lot to ponder, and a lot at risk, too.
You need to have a strong understanding and a clear goal to determine what makes a good purchase, whether it be for a condo, a townhouse, or a single-family home. When you do it right, you will have a definite return through a passive income, tax breaks, and definite equity gains.
To help you out, here’s a quick guide on things you need to consider to determine whether it is a good idea to take the leap in buying an investment property.
Location, Location, Location
Location, location, location’, is a shared mantra in real estate. Write this down on your priority list – location first, property second. Location is the key to valuable real estate.
Though we do understand that you are going for the physical structure, having the right property in a wrong location is most likely not the property you need at all.
You need to consider the appearance, accessibility, and facilities of a neighborhood as well as plans for expansion and development. Also, a lot’s nearness to factors like busy roadways and public centers makes it less advantageous for resale.
Furthermore, acreage often outdoes the value of a property since land has a tendency to increase in value.
Define your property type
It is best to lay down all your plans and specifications, and define the type of property you want to invest in.
Ask yourself these questions, do you prefer to have a single-family home or do you want a multi-unit property? Or are you going for a low-maintenance condo
Notably, you can actually get more cash flow with multi-family property, however, single-family properties tend to acquire more equity appreciation potential in thriving real estate markets. Or maybe, you prefer to have a townhouse in the mountain area?
Your answer to these questions will determine the next steps your real estate agent will be taking to provide you the best options.
Best time of year
Real estate markets undergo seasonality, which results in a certain rise and fall at specific times, all year-round. The best time to purchase a property every so often ends up in the late summer or early fall.
About this time of the year, there tends to be less competition compared to the peak season during spring and summer, despite that, there is still a quite a good number of properties on the market.
Bedroom count matters
A 3-bedroom property versus a 4-bedroom one for the exact same size or square footage, usually does not rent for the same price. Though they are often sold for the same price. Positively, having a home with more rooms is always an advantage – more uses, bigger chance of charging more for rent, opportunity to do home improvements, and is preferred for family buyers. However, that is always not the case, since more rooms compromises other home spaces.
On the bottom line, it is important to check with your real estate agent the pros and cons of having a 3,4, or 5 bedroom space to make sure that you maintain your profit margins as high as possible.
Vacation Rental Management
You won’t want to spend your time managing vacation rentals since it entails a lot of work. Thus, most homeowners opt to outsource these tasks to short-term rental or vacation management companies.
Partnering with them includes listing the rentals on online booking platforms, setting the price for each rental and making adjustments for season changes; responding to inquiries from potential and existing guests; and communicating with cleaning and maintenance staff all throughout the duration of your contract with them. Property managers earn a commission from every booking they successfully confirm.
There are a lot more factors that you need to consider but these are the focal things that will help you kick start your investment. However, it is best to keep in mind that there is no guarantee for a big return in your property investment – you need to do rigid planning on selecting and buying your investment property, with high consideration of market trends and general guidelines.
Thus, it would be best to always reach out to your local real estate agents before making the leap. Contact Westward Advisors for a consultation or book a no-obligation call with us at 303-641-3341.