Things to Consider When Looking For an Investment Property
Investing in real estate is a great way to diversify your portfolio. There are many different ways you can invest in real estate, and here are a few things you’ll want to keep in mind if you’re looking to purchase an investment property:
What type of property do you want to purchase?
There are many types of property to invest in. You can buy a fixer-upper and flip it; you can buy a home and rent it out; you can buy a piece of property and simply hold onto it over time as its value increases, and more. Be realistic about what you can and are willing to do to invest in and maintain your property.
Are you prepared financially?
Typically, you will need a 20% downpayment for an investment property. So you’ll want to make sure that you have cash ready and are prepared to pay another mortgage.
Are you prepared to potentially maintain another property?
If you’re going to rent out a home, are you ready to become a landlord? (Can you afford to hire a management company?) If you’re going to be a landlord, be prepared to encounter any number of challenges. You may need to make unexpected repairs, or deal with potentially unreliable renters, for example.
Do you have the experience necessary?
Finding a deal on a fixer-upper can be tempting—imagine how you could transform it and sell it for so much more! But take the time to do your research. Do you have the skills you’ll need to remodel a home? Have you helped someone else remodel a home, and know what to expect? Do you have the money you’ll need in addition to purchasing the home to successfully remodel it? We recommend you start small if it’s your first time.
Despite all of the potentially challenges that can come with an investment property, taking the time to do your research and finally make that step to invest can pay off BIG TIME in the future! It’s totally worth it if you’re willing to put in the time and effort.