Buying an investment property is equal parts daunting and exciting. In fact, your first investment property can feel like a real roller coaster of emotions. Like with all things, there will be a learning curve to walk through, but these 4 simple steps can help to ensure that you are on the right course as you journey ahead into this thrilling new time in your life...
Prepare for interest rates and down payment. They will be different from what you are used to.
Investment properties work much differently than an owner-occupied home. You should expect to make a down payment of at least 20%. Likewise, your interest rates will be different than your home interest rates as well. For this reason, you will want to research the interest rates for investment properties.
Decide if you want to flip or rent.
Renting and flipping will require different tactics. Flipping will take a lot of upfront cash and fixing up. Next, you will need to think about the burden of selling the property which can be quite the feat in and of itself.
If you choose another route, renting will require a lot less repairs, but it will take considerably longer to get back your investment.
Research the market. Don't take it on lightly.
In other words, don't be a skimmer. Get into the details of the market and know the current market trends. What incentives are other properties offering? Jump on the band wagon and one up other competitors when you can.
Consider repairs and other costs.
Your game plan for how you handle your property will depend on what you want to do with it. Know ahead of time if you want to flip the property or rent it out, and then make a educated determination of what the repairs will cost and how long you expect to earn that money back from your investment.
Though each investment is unique, if you plan ahead, you can avoid the common pitfalls of investment properties. Take advantage of programs like Success Path which can help you to maximize your investment and get the most of your ventures.
The 11 Best Tips For Buying Your First Investment Property (Ep49)