It is no secret that the great housing bubble that busted in 2008 was devastating to our housing market. Values of houses all around the United States plummeted for the most part and were very slow to appreciate over the last 5 years. Depressed values afforded many investors the opportunity to purchase discounted real estate. There are now entire shows revolving around the purchase of investment homes and it is a very attractive form of income generation. What a lot of those shows don’t show you or teach you is the risk and details behind the purchase of investment homes. Here are several tips when considering the purchase of investment property.
The first thing you have to figure out is what kind of investment strategy you are pursuing. Are you looking to purchase a foreclosed property that you can renovate and sell for a quick profit? Or are you looking to purchase a property that you can use as a rental home for the rest of your life? Are you looking to buy residential real estate or commercial real estate? Discovering the way that you will make your money on the property is vital and will help you choose the right property.
Location of the property is crucial when purchasing an investment home. If you are planning on leasing the property out then it has to be in a desirable location. If you are looking to sell the home more quickly then the location has to be desirable as well. Otherwise you will be stuck with a home that you can’t rent out or you will be stuck with a home that can’t sell. In both cases you’re losing money.
Whether you are purchasing a rental property or purchasing property you can sell quickly the big question is how much will repairs cost. One of the reasons that people don’t buy very large homes for the sake of rental property is because the upkeep on those homes out cost the profitability of the home in a lot of cases. If you purchase a rental property you have to consider the cost of repairs throughout the years. If you purchase a house that you want to sell very quickly then the initial repairs and cosmetics of the house have to be pristine for sales.
4. Back up plans
A wise real estate investor said that real estate is not the ideal business. He meant that at any point things could go south and with that in mind you always need an exit strategy. If you are buying a rental property and you can’t rent it out for whatever reason do you have a plan to sell it? If you have a house you want to sell at a particular price would you consider renting it out if you couldn’t sell it quick enough? Always have an exit strategy in real estate.
Real estate investment is not easy and safe. Things break, homes get damaged, and it’s not always the perfect case scenario. One of the things that I did was get Smith Home security for my investment homes to help protect them from any kind of thievery and also to protect the property at all times. You should consider doing the same for you investment properties.