If you’re considering buying an investment property, chances are you’ve bought and sold your fair share of homes. However, investment properties come with their own fair share of challenges. If you’re interested in broadening your portfolio, we’ve got some tips.
Make a plan
Do you know what you’re getting into? Being a landlord can be difficult work and requires you to wear a lot of different hats. You’ll be a marketing expert when advertising your space, a repairman when there’s work to be done (doing repairs yourself will save you money), and a manager when keeping all of your bills and properties in line.
This may seem daunting at first, but creating a plan and checking your finances will ease this process. As you grow your portfolio and make money, you may want to invest in a team you trust, including a handyman, a landscaper, and other professional contacts.
Set your budget and determine a profit margin
Your initial investment into your property will be the biggest you ever make and will greatly impact other factors along the way. If you’re looking into your first space, consider a lower budget home or condo. This will keep operating costs smaller and broadens your chances for a profit.
If you spend more than you’d like to on a property, this will impact your profit margin and money you can put towards repairs and upgrades. Remember, spend wisely and investigate your finances before making such a big decision.
Find the best location
If you’re investing in a space in your local area, chances are you’ll know where to look for the right property. However, if you’re trying to find the right opportunity and don’t know where to start, do some research and see which locations are right for you.
Some neighborhoods may be more appealing for an investment property because of their proximity to amenities or short commute opportunities, but be sure to plan accordingly based on your budget.
Don’t get attached to cosmetic issues
When you’re buying a property, you may be used to thinking about it as yours to live in. This isn’t always the case if you’re looking for a property to rent out. That means you’re looking at a home with bright walls or cabinet colors that aren’t quite to your standards, don’t let them impact you—these are issues that can be fixed, and most importantly, you won’t be the one living in the property.
Of course, your opinion matters, but don’t let small issues completely sway your thoughts on a space.
Budget for the Unexpected
Make it a policy to expect the unexpected when you’re budgeting for your new property. It is recommend that you over-budget, if possible. Plan to spend more than you are likely to actually spend. This will give you a bit of a buffer and also protect you from the financial shock that often comes with unexpected maintenance, a reduction in cash flow, and higher insurance or tax bills.
Not all expenses will be obvious when you buy, even if you have an inspection done. Be prepared to spend more then you thought you would have to.
Your Local Real Estate Experts
Looking for more information on property investment? Contact us now to take your first step towards finding your dream space. No matter where you are in the buying process, we’d like to assist you in any way that we can.
