Did you know that roughly 90 percent of millionaires made their fortune through real estate investments? So, it’s no surprise that many individuals who want to make a passive income consider buying an investment property.
Of course, investing in real estate is a big endeavor, especially if you’ve never done so before. This post will share three expert tips that will help you get started and avoid making mistakes from the start, so keep reading!
1. Create a Financial Plan
Before you can make a solid investment, you need a financial plan. Don’t forget to include factors like the down payment, financing, insurance, and repairs. This plan will help you determine your budget for an investment property.
Next, you’ll want to save for a down payment or build equity, remembering that some investment properties may require you to put twenty percent of the sale price down.
Of course, if you have the cash to buy a property outright, you’ll need to consider whether you want to tie up that much money in your investment or get a mortgage. Paying with cash may be more advantageous in some scenarios since mortgages for investment properties tend to have higher interest rates.
2. Evaluate Potential Properties Carefully
After considering your budget, you’ll need to think about the type of property you wish to purchase. Some examples include:
- Single-family homes
- Multi-family residences
- Luxury homes
- Vacation properties
No matter which type you plan on purchasing, it’s crucial to learn how to evaluate a property so you can determine whether it is a good investment.
Perhaps one of the most important things to consider is the neighborhood, as this directly influences property value. So, besides being safe, you should look to purchase a home in areas near hospitals, schools, malls, or other establishments where the vacancy rates are low.
3. Pick an Investment Strategy
There are many ways to make money on real estate, so you’ll want to consider your investment strategy carefully.
For example, if you don’t want to deal with tenants, you can flip houses. This strategy also leads to quicker property investment ROI. But, of course, this usually involves repairing or remodeling properties, so you’ll need to decide whether you’ll do this yourself or hire someone to do it for you.
Many investors decide to rent their properties to have a steady flow of passive income. If you choose to go this route, you’ll want to consider whether to offer short-term or long-term rentals, depending on rental yield and demand for both.
The downside of renting properties is that you’ll be a landlord, which may mean dealing with repairs or other issues that occur. But, if you don’t have the time or patience to worry about property management, you can hire someone to take care of this responsibility for you. For an example of this kind of service, check out www.propertymanagersphiladelphia.com.
Buying an Investment Property Is Easy!
With the help of this brief post, you are ready to build a strategy for buying an investment property. Of course, along the way, you’ll want to do plenty of research so you can make the best investment possible.
So, don’t leave our website just yet! Instead, browse more of our content related to real estate and financial wellness!