New Year Goal – Buying an Investment Property
Buying an investment property isn’t as simple as finding a great location you love. You need to understand the property market and know what future trends look like. Along with setting an achievable budget, decide exactly how you want your investment to go before taking the plunge.
Investing is a great option that can help you turn a profit and build up your portfolio. Before buying an investment property, understanding all aspects can help you achieve the new year goal you’re after for yourself. As well as seeking advice from someone who has already successfully invested in real estate can help you know what steps you need to take to plan.
Do the Research
It’s wise to gain a solid understanding of the property market before you buy—not just currently, but for the future. A property you buy today may not have the same appeal a few years from now if you’ve purchased in a neighborhood that isn’t thriving.
Look at potential market growth and trends to determine the best area for investing and updates you can make that will help you sell.
You can also look at the top locations where sellers are moving. Many people have relocated to states like Idaho, North Carolina, and Maine in recent years. Investors and families seek areas with education, jobs, and safety opportunities.
You’ll also want to look at housing prices in the areas you’re considering and make sure you have the down payment saved. While one person may want a cheap fixer-upper to work on themselves, another may prefer a home that’s move-in ready aside from a few minor changes.
Doing research and having a solid plan that feels best will help you succeed.
Network and Seek Advice
Network with other investors. Attend classes and shops. Mingle with others who’ve done this before and seek advice from those who have been successful.
Learning from another person’s success can help you determine all the right ways to achieve similar success for yourself. You may also get some great advice regarding what not to do from those who haven’t reached the level of achievement they’re after.
Look at 3D tours and walkthroughs of homes. Receive property valuations from market experts. You can even read through blogs to find some of the latest marketing trends, news, or home improvement ideas to make your property stand out when you sell.
Create a Useful, Achievable Budget
When buying an investment property, you’ll need to create a budget that’s not only useful at the time but also achievable in the long run. You need far more than a down payment or enough to cover the property cost, and it would help if you took the work you’ll have to accomplish into consideration as well. Not to mention, you should know the pricing trends and how much you could lose or gain by the time the property is ready to sell.
When it’s an apartment building or rental property that you’re planning on buying, you have even more to consider. What are the current rent tenants paying? What expenses do you have to pay each month as the property owner? How often does pest control need to occur, how much is HVAC maintenance, and what about lawn care?
You’ll also need to be aware of taxes and report your rental income to the IRS. There are far more questions to answer in these circumstances, so you can set your budget accordingly and know if you can handle it.
Consider the Number Rules
There are two number rules to consider when it comes to investing, depending on exactly which type of investing you’re doing. The two percent rule applies to buying rental properties you plan on maintaining. Rent the property for at least 2% of the purchase price, and you should turn a profit.
The seventy percent rule applies to flipping properties, and don’t pay more than 70% of the After Repair Value. As long as you research the repair costs and can meet deadlines for getting those repairs accomplished, you should be able to make a decent profit on the property.
Of course, these “rules” are just guidelines to consider. They don’t have to be followed entirely but make a good starting point to consider when looking at all the numbers.
Determine the Type of Investment You’re Interested In
You have two options when it comes to making property investments. You need to determine the best one for you before you get started.
Are you planning on fully investing in a rental property? You’ll purchase it, fix it up, and find a renter to live in it to earn you a monthly profit.
Or, do you plan on flipping investment properties instead? You’ll buy a place and fix it up well, selling it off to someone else for a profit. That someone could be a new homeowner or another investor.
Weigh your options and determine whether you want to be responsible for handling renter applications and landlord duties before you make your final decision.
You also can choose whether you want to invest in rental properties, commercial businesses, industrial spaces, or land only. No matter which type you choose, you’ll still need to have the money ready and understand the potential for growth in the area. Residential spaces are common choices because there is always a need for housing.
Let Offercity Help Achieve Your Goal of Buying an Investment Property
Once you’ve done your research about buying an investment property, learned about other success stories, created your budget, and determined the type of investing you want to accomplish, you’re set to get started. With Offercity, investors have access to fully vetted properties and can have them sent straight to your inbox. Join now on our investor page!