Having an investment property as one of your assets is a way to grow your wealth and benefit. Sometimes the returns can be almost immediately, and sometimes the profits take a few years to start coming in. It’s all a matter of where you invest and what you put your money into. Let’s go through some of the factors that can change the way your investing experience goes, and hopefully we can guide you in the right direction to healthy investments and a happy life.
Financing, loans, and money.
You should be weary of this part the most. Most lenders and banks will only lend a little over half of a property’s value if it’s going to be for an investment. This ‘ceiling’ is there because buying an investment property – specially your first – is considered risky behavior, specially in today’s real estate market. You don’t want to lose money and neither do they. This is why you may want to tap into your current resources and pull money from your existing investments, such as borrowing against your current home’s equity. This will maximize the amount of money that you can spend in your investment property, which means you will be able to bring in more profit.
Location, location, location.
When it comes to buying a property to fix and flip, you want to focus on the location first. After you buy a home in a good area, you can stand to focus on every detail and know that you will likely make a profit. However, investing in a bad area is extremely risky and not as rewarding. A home’s location is everything – it decides the school system, crime rate, property values, and more. You should seek to find a property that is close to everything that you would want to have close to you – a shopping center, transportation, different school options, and more. If you did a good job picking locations, you will usually make a profit on it, whether it’s from a one-time sale or recurring rent payments.
Type of housing structure.
This is the last piece of the puzzle. You have your money in order, the ideal neighborhood in mind, and now what you need to look for is a specific property type. This all comes down to what you want. Do you want to own a home that you can rent out and make money from consistently? Do you want to buy a home and instantly fix and resell it? Are you looking into investing in an apartment complex or condo? These are all questions to ask yourself. Some investments give an immediate payout, while others pay their value over time. Some properties also require more maintenance than others. For example, investing in a condominium will mean that you won’t have to lift a finger to manually call a plumber or anyone to take care of the basics of the property. Investing in a home that you’re renting will mean staying on top of the maintenance for the home whenever something goes wrong.
At the end of the day, finding the ideal investment property is all about what you want to do with it. You may have a different goal in mind than someone else. You may want to put all your money into buying and flipping homes, while someone else may want to retire and live happily off of recurring monthly payments. What’s your preference? Each has its benefits and disadvantages – all that’s left is to sit down with an investment broker and see what would be best for you and your current financial state.