Buying an investment property is one of the most exciting ventures to be made in the real estate industry. Whether you’re looking for a commercial or residential property, there are numerous details to consider before fully immersing yourself in the rental property arena.
It’s important to remember that investment properties are still an investment, after all. You’ll need to be ready to put in the time, money and even sweat equity to make the most of your investment. Although there are challenges to be faced and it won’t always be easy, there are some very useful tips to help you out when buying an investment property.
1. Give yourself an honest assessment
Do you have what it takes to be a landlord? While you might want to answer that question with an emphatic “yes” you need to think deeply about what being a landlord really entails. Being a landlord is a tough job that requires you to work on the clock 24/7/365.
Some people buy their first investment property without ever considering the responsibilities that come with being a landlord. Making tough decisions about the colors to paint the walls or what appliances to put in the kitchen will be some of the easiest things you’ll deal with in the grand scheme of things.
Thinking about how you’ll respond to a tenant that cannot (or will not) pay their rent or what you’ll do if they continually violate your lease agreement are things you’ll need to consider before jumping into the investment property game. If you’re a particularly friendly and understanding person, you’ll need to learn how to separate your emotions from some of the tougher decisions you will make if you want to have the most success possible.
2. Do your research
Nothing’s worse than outright buying or financing a property, only to find out that the roof needs to be replaced, the foundation is shot or that there’s a mold issue. Some investors love these types of homes because they plan on rehabbing the home or property and turning it into their exact vision. But if you’re just starting out or are not of the mindset that flipping or rehabbing will be what suits your wants and needs, then inspections and second opinions will be your best friends.
There is usually more than meets the eye when it comes to a property. While that can sometimes be a good or even great thing, it can also be catastrophic. Wise investors know what they are getting themselves into before signing their name on any legally binding paperwork. Knowing the ins and outs of the property is an absolute must before you ink your name on any dashed lines.
3. Don’t forget about marketing
Finding the perfect investment property for your needs is on the top of the list, but it’s easy to overlook the fact that you’ll eventually need tenants to occupy the space so that you can eventually be cash flow positive.
While you may not need to go so far as to hire a marketing agency to take photos and advertise your property, it may be in your best interest to do so. After all, an empty investment property will burn a hole in your pocket faster than many other objects. Getting the word out is a crucial component of being a successful investor and one that can prove to be quite costly if done ineffectively.
Think about the mediums you’d like to use to advertise in regard to websites and other web advertisements. Even the newspaper can provide good advertisement for your property.
Purchasing an investment property presents an incredibly exciting opportunity. Though it’s easy to become fixated on what your bottom line will look like or what work needs to be done immediately, having a long-term vision and keeping your eye on the little details will ensure that your investment is an absolute success.