If you’ve decided that an investment property is the right purchase for you, there are three things you’ll want to consider before you sign the contract on your first fixer-upper or rental unit.
- Location. You might have found a great property, but is it in an attractive location where other people would like to live? Make sure you really check out the neighborhood to make sure it is in a desirable area. It could be the perfect house, but if no one wants to live in that area, you are not going to be able to make any money. An experienced realtor will have the insight to help you find the perfect spot for a successful investment property.
- How much work does it really need? Before you put an offer in, you need to have a very clear picture of all of the work (and money!) this property requires. If this is your first time rehabbing a house, bring a contractor with you to give you their honest opinion of all of the projects that need to be done. A property may appear to only need cosmetic changes, but there could be larger foundation issues (for example) that aren’t obvious right away. Don’t make a bad purchase that will end up costing you money!
- The Real Costs. Making a decision based on emotion is a big mistake that many first time investors make. Beyond the purchase price and renovation costs, you’ll need to consider property taxes, insurance, and operating costs. Be honest and realistic about what your investment will cost now, before it’s too late.
Remember: A smart rental investment property is one that appreciates in value. A great realtor has insight into different communities that are perfect for investments. Ready to start the hunt for an investment property that will make you money? We’d love to help!