- Talk to an accountant and analyze your finances, start working on your credit score etc. You will want to have everything lined up so that you can ensure that you will be making money with your investment.
- Be sure that you will be able to save your money towards other life goals (such as retirement, vacations, education, etc) even with making this investment.
- Talk to a mortgage broker and get prequalified so that you know how much you will be able to borrow, and can start looking within that price range.
- Do not overestimate how valuable the rental will be. You will need to figure in potential repairs and vacancy time.
- Research your real estate market trends, you could possibly have a Realtor help with you this, so that you can have an idea of what the market has been doing and what its potential is in the future.
- Decide how long you want to own the property as that will affect how much money you may potentially put into the property. The longer you own it, the more repairs that will need to be done over the years, to keep up with basic maintenance.
- If you are a small investor, long term ownership does make the most sense, as you will not have to worry quite as much about market fluctuations, the longer you own a property, typically the more equity you will build in it over the years.
- Do not get emotionally invested in a property. As this can make negotiations harder to do.
- Have the property fully inspected, even if you are looking for a fixer-upper, as this can help you to know if there are going to be any unexpected expenses regarding things that will need to be fixed.
- When comparing the rent on similar properties in the area you will need to be sure that you price your rent in a similar range (to ensure that it rents as well as the others do), while also being sure that the rental income will cover out of pocket costs.
- If you are looking at properties in housing developments, you should check and HOA's or covenants to be sure that renters are allowed in those neighborhoods before you make an offer on that property.
- Once you have your property you will need to decide if you want to manage it yourself or go through a rental company.
Wednesday, January 28, 2009
Tips for Buying Investment Property
During this current market, with the low prices, foreclosures, and short sales many people are starting to mull over the idea of investing in property, especially rental properties. There are definitely some things you will want to consider before starting your search, as you do not want to rush to find an investment property and have it turn out to be the wrong one for you.