Investing in income properties can be financially rewarding, but it isn’t easily done. You can start on the right foot with a comprehensive plan that takes both the local market and your financial situation into account. Never jump into an investment without a sound strategy!
What Kind Of Income Property?
When planning your purchase, you have to know what you want to do with the property. Are you looking to flip the home and make a profit? Or are you going to rent it out to tenants? The property you end up investing in should reflect your intentions. If you’re getting into property investment for the first time, you shouldn’t try to make something work when the financial and time expenditures are too much.
For first-time income property investors, a good start is a single-family home to rent out. These properties attract renters that need longer commitments, and besides, families or couples make for better tenants than singles. Couples are more likely to be financially stable, meaning they’re more likely to pay their rent on time.
Research The Neighbourhood
You can never really do too much research, though at some point you’ll have to pull the trigger before you lose an opportunity. Some things to check in your search include:
- The neighbourhood in general. How liveable is the neighbourhood? What are other properties in the area going for?
- The vacancy rate. Too many homes standing empty is a bad sign.
- The average rates for rent or mortgage
- Property tax rates
- Crime levels
- How close it is to schools, libraries, and other amenities
You can get the gist of the neighbourhood by looking at numbers, but the best information comes from the people living there. Talk to the homeowners if you can, as they will be able to tell you crucial information about actually owning in the area, but don’t forget to also talk to those renting places, too. Renters have no stake in the neighbourhood and will be open about the negatives aspects of it.
Find The Potential
Once you know the neighbourhood, look for a property that shows potential. It should be something that appreciates well and has the promise for cash flow. To do this properly, look into properties that are at different ranges of the price spectrum, even if they are more expensive than you can afford.
Do All This Without An Agent
In the first stages, do all your income property planning on your own without a real estate agent. An agent can pressure you into making a financial commitment before you have found the perfect investment for you. It can take some amateur sleuthing to find the right investment, but it’s better to be certain than spending money on a property that isn’t right for your goals.
Before turning to a real estate agent, seek the help of an unbiased expert like Matthew J. Scott. He can give you advice that takes your specific needs into account, helping you avoid money traps and find what’s right for you!