Investment properties can set the stage for considerable gains in both the long and short term. However, if you have little to no experience with such investments, getting into real estate is liable to seem like an uphill battle. While it’s true that seeking out the right investment properties do have its challenges, equipping yourself with the right information can dramatically diminish your chances of losing money. First-time investors on the hunt for profitable investment properties would do well to consider the following info.
What Kind of Area is the Property Located in?
When searching for the right investment property, location should be among your foremost concerns. After all, no matter how nice or amenity-laden a property is located in an area in which demand for housing is on the wane should count as a strike against it. So, before committing to purchase an investment property, make a point of thoroughly researching its location.
In the course of your research, you should pay special attention to local property values and rental rates, as this will give you a good idea of how much you can expect to make with this property. As an added bonus, familiarizing yourself with local property values can help ensure that you don’t wind up overpaying. Secondly, take care to consider population, rate of growth, and long-term growth projections, since large populations are conducive to high demand for housing.
Would You Prefer to Be the Sole Investor?
Like most real estate, investment properties generally don’t come cheap. Even mid-to-low-range properties are likely to represent sizable investments. As such, being the sole investor also means being the sole risk taker. Sure, you stand to make quite a bit with the right investment property, but you also stand to lose quite a bit with the wrong property.
If you lack the capital or experience to purchase an investment property solo, there are a number of real estate crowdfunding factors to consider. For instance, when going the crowdfunding route, the financial burden is spread across many different parties. This helps ensure that even if an investment turns out to be unwise, no one party is out all that much money. Secondly, should you choose to pursue real estate crowdfunding, you won’t have to worry about seeking out potential investment opportunities on your own. With many crowdfunding arrangements, someone who is highly adept and experienced at finding profitable properties is tasked with locating safe investments. Risk-averse investors who have never considered real estate crowdfunding would be wise to give it a second thought.
What’s the General Condition of the Property?
Even if a potential investment is located in a high-demand area, the property’s general condition should still be considered carefully. In addition to personally performing a detailed walkthrough of the property, you’ll need to enlist the services of professional property inspectors. These individuals are trained to catch problems that most people outside of their profession are likely to miss, which can save you the stress and financial strain of dealing with hitherto-unknown issues with the property down the line. Furthermore, professional inspections may be a prerequisite for getting the property insured.
That being the case, every property purchase you make should be contingent upon professional inspections taking place – regardless of how much a seller attempts to dissuade you from them. Additionally, if a seller absolutely refuses to consent to prepurchase inspections, you’re better off not taking a chance on this property, especially in light of such suspicious behavior.
Prepurchase inspections will also provide a solid understanding of how much work a property requires. So, once you’ve received the results of an inspection, request estimates from various contractors, as this will give you an idea of how much you can expect to spend on repairs and/or renovations.
Although investment properties can often be lucrative ventures, it’s important to understand that success is never a sure thing. However, by doing some research and putting genuine thought into each real estate purchase, you can help ensure that you don’t make an ill-advised investment. Fortunately, making informed investment decisions isn’t as difficult as you may think. Taking the factors discussed above into careful consideration before purchasing your first investment property can significantly reduce your likelihood of making an unwise purchase and provide you with valuable peace of mind.