Buying property, especially your first property, can be overwhelming. There are a lot of financial and legal steps to manage. You’ll also need to consider location, the housing and economic climate, the amenities your renters will be seeking among other pitfalls and opportunities that may arise.
Below are 10 tips to consider when buying property
- Use leverage: Understand the mortgage market. Mortgages can be beneficial to keeping your costs low and help secure the property’s cash flow. Also, the right mortgage will free up money for repairs that will undoubtedly arise at your property.
- Make sure your financial assets are in order: Obtaining an investment loan can be tricky. Some states, including Florida, are strict when handing out these loans.
- Invest in turnkey properties: Turnkey real estate can be a great strategy for first-time and experienced investors. This strategy includes investing in properties with existing tenants and property managers. This means your money comes in and you don’t have to take those late-night rental nightmare phone calls. Though turnkey real estate can be profitable, make sure you aren’t taken advantage of. Ensure your stake in the property is secure and the location of the property is known to be safe and profitable.
- Find quality tenants-- and quickly: Though easier said than written, it’s important to know your marketing strategy to fill your property fast with trustworthy and reliable tenants to maintain a steady cash flow.
- Know the neighborhood: Make sure the neighborhood is safe and your investment won’t be riddled with an unruly owner or tenants. Also, speak with the neighbors about the property and how the area is in the morning and evening.
- Work with a property management company: This is another tip to ensure you aren’t the one handing those 2 a.m. maintenance calls. Make sure to do your research on these companies as well. Respected property management companies will relieve the hassle of performing background checks, taking those maintenance calls and interviewing prospective tenants.
- If possible, purchase a property with outdoor space: As expected, most people would love an inviting outdoor area to relax or have friends over.
- Purchase a vacation home: When markets are good, this investment can yield great results. Identify areas that are growing and make sure zoning and boundary laws allow you to rent your property to visitors.
- Choose your property wisely: If you aren’t investing in apartment buildings, invest in property near apartment buildings. There is typically demand in areas with apartments because renters are looking to upgrade.
- Pay attention to the housing and economic markets: Be aware of your financial surroundings. The profitable investor knows that recessions are the best time to buy, but also knows that they may have to sustain the property without cash flow for a while. When the market hits a positive note, showing signs of recovery, rental prices and prospective tenants will begin to increase.
There are many things to consider when investing in property. It can be a fruitful endeavor but do your research and be prepared for any pitfalls that may arise.