Did you know that about 70% of investment properties are owned by individual investors? If you’re an individual inventor interested in buying an investment property then that statistic might make you jump at the next offer you see.
There's no doubt that buying an investment property can be a great way to grow your wealth. But before you make the leap, there are a few things you need to consider. Here are five things to think about when purchasing an investment property.
1. What Type of Investment Property Do You Want?
First, it’s important to consider what type of investment property you’re interested in buying. To make this decision, it helps to take a step back and consider your financial goals.
Are you looking for long-term appreciation or short-term income through rental income? This decision will determine whether you should focus on buying single-family homes or multi-unit properties.
2. Where Do You Want to Invest?
Where will you look for investment properties? A good starting point is to focus on areas with a strong job market and population growth. These factors may indicate an increase in demand for housing, which can lead to higher rental prices and property value appreciation.
It's also important to consider the cost of living in the area, as well as any potential risks such as natural disasters or economic downturns. This can help ensure that you'll have steady cash flow from tenants and the potential for profitable resale in the future.
3. What’s Your Budget for Buying Property?
Now, you’ll need to develop a budget for buying an investment property. In addition to the upfront cost, consider extra expenses such as home insurance and property taxes.
It may also be helpful to consult a financial advisor or budgeting expert who can assist in creating a budget specifically for purchasing real estate property.
4. How Will You Finance an Investment Property?
With that budget in mind, consider how you’ll finance an investment property.
The most common way is to take out a traditional mortgage loan from a bank or other lender. Another option is to finance the property through a private investor, either by getting them to finance the entire purchase or by bringing them on as a partner.
Ultimately, the method of financing that works best for you will depend on your situation and goals for the property.
5. Are You Comfortable Managing a Rental Property?
Finally, when buying an investment property, consider whether or not you’re comfortable managing a rental property. Most first-time investors invest in rental properties only to find out it’s not for them.
Managing a rental property can be a daunting and intimidating task for some. It involves finding the right tenants, collecting rent, performing maintenance and repairs, and possibly even dealing with evictions.
If you find that it’s overwhelming for you then…
Get Help With Spokane Rental Management Services
At HomeRiver Group Spokane, we can manage your investment property for you. Our experienced team can handle everything from tenant screenings and lease agreements to maintenance requests and rent collection.
Click here to learn more about our Spokane rental management services.
