When buying real estate, it's important to remember that all purchases of real estate are essentially investment properties. What will matter most when buying real estate for investment is what the objectives are of the purchaser. Rental properties, specifically, generate regular income, and, in this market, can be ideal right now-if the investor takes time to consider these four possibilities:
#1 - Choose the Right Location
The ideal location for rental properties is where the population is dense. Look for areas near colleges and universities, accessible to public transportation options, and close to activities such as shopping centers, cultural events, and the like. Renters with children typically wish to be in areas that have good schools, and safe neighborhoods, so choose an area that is close to the best schools, private schools, or have a great deal of activity and population density.
#2 - Sound Financial Planning
In order to take advantage of the buyer's market, ensure that there is enough capital to handle typical investing risks. There's no need to stop at working with lenders. Lenders can be very helpful with understanding financial goals, but they're just for starters. Discussing options with a financial planner can help increase capital to pay for many potential obstacles. It is also important to try to have at least six months worth of mortgage payments on hand to cover repairs, maintenance, or transitional periods where the house is between renters. Buying real estate for investment is just the beginning; knowing the investment hazards and being prepared to avoid them will help make the most out of any investiture.
#3 - Consider Property Management
A property management firm can assist in the daily rental issues that occur, and having a maintenance team on board can ensure issues are taken care of before they become problems. Moreover, consider expanding the property management team to include an attorney to handle legal issues, and an accountant to assist with finances and taxes. In this case, more really is better, as a good team can work ahead to foresee potential issues that could become headaches if not handled immediately.
#4 - Choose Experienced Partners
When just starting out in investment properties, it's a good idea to partner up with an experienced real estate agent, who knows about buying real estate specifically for rental and investment properties. A good broker will assist their clients with sound recommendations and advice, because they want repeat investors. They look to seek relationships with investors over the life of the investment, and are always able to help search for growth opportunities.
Now is a great time for buying real estate to turn into an investment property, particularly rental properties. This is specifically true for rental investments-with good tenants there is the promise of steady income and gains. By keeping these four tips in mind, foreseeable pitfalls can be avoided. With market prices being as low as they are right now, getting in on an investment property is ideal.