Buy and Manage a Gorgeous Investment Property With These Tips
Nathalie Jones / May 7, 2021
Buying an investment property comes with many benefits when it’s done correctly, but it’s essential to make sure you’re familiar with all the details in the process so you can come up with a solid plan for follow-through. Finding the right area to buy in, getting insurance and other protections into place, and finding tenants can all be time-consuming and costly if you’re not well prepared. Start by keeping up with the latest trends around the world at Net Worth Space, which will help you figure out what renters are looking for. Then, think about how to effectively manage the property.
Consider a foreclosure.
Although it comes with a lot more considerations than other buying options, purchasing a foreclosure can be beneficial if you know how to handle it correctly. Typically, a home goes into foreclosure due to factors such as months of missed payments, divorce, or the owner’s inability to pay for major home repairs. This means you’ll likely get a great deal on the price. Most foreclosures are sold as-is, so it’s essential to try and work in an inspection contingency that will help you get out of the sale if major issues are found. Costly repairs, such as plumbing or roof work, may be grounds for a negotiation on the price in some cases. Make sure you’re covered with a professional inspector and get pre-approved for a loan to make the process go as smoothly as possible.
Find a desirable area.
If a foreclosed home isn’t available, start your home search by looking for desirable neighborhoods. The best areas for renters will typically be close to shopping and dining options and will have highly-rated schools — although, of course, this won’t be a factor if you’re renting short-term on a vacation property. In that case, you’ll want to look at local events and attractions, as well as safety and crime rates. Take a look at other rental properties in your preferred area to get an idea of the amenities and benefits offered as these will be your competition.
Once you have a great property, you’ll need to start thinking about how you’ll manage it. If it’s located in a different city from where you live, how will you get back and forth to handle repairs, renovations, or emergencies? What are the building and landlord codes for that city? Do you need special permits to be a property owner there? Do some research to find out what your responsibilities will be.
It’s also a good idea to think about insurance and how you’ll manage your liabilities as the property owner. Once you’re ready to take on renters, do a walkthrough and inspect anything that could potentially be damaged or changed, taking note of its condition with clear photos. Look for safety issues that need to be taken care of before tenants move in, and make a list of rules and resources to help them stay safe while they’re on the property.
Figure out your cash flow.
It’s essential to think about your finances from the very beginning, so once you take ownership of the property, figure out what your expenses will be and how to make the venture as profitable as possible. Keep long-term expenses — such as insurance and property tax — into consideration, as well as the daily and monthly ones, including furnishing a vacation space.
Buying an investment property can benefit you for years to come if it’s done right, so do your research and look for resources online that will help you make informed decisions. With a solid plan, you can turn your venture into a success and possibly grow it with more real estate purchases in the future.