Top 10 Tips for Buying Investment Property
We have helped many clients build their investment portfolio along with their personal net worth through strategic investing in real estate. Here are our top 10 tips for buying investment property. If you think you are ready to begin investing or are looking for your next piece contact us today! We will set up a consultation to help determine your investment goals & figure out what is right for you.
|Price Range:||$200 to $3,900,000||Price Average:||$505,498|
|Size Range:||1 to 17,532 Sq. Ft.||Size Average:||3,280 Sq. Ft.|
1. Location, Location, Location
The holy grail of real estate. We can never say it enough! Location differs a little bit when purchasing an investment as other factors can be taken into account. Is it located near a college, public transportation or nightlife? This may not be of interest when purchasing your primary, however, these tend to be very good qualities when investing.
2. Make it Nice….But Not Too Nice
If you have to renovate make sure you pick quality finishes that can take a beating, however, this is not the time to splurge on a fancy kitchen or exotic hardwood floors. Go with simple, timeless & tough.
3. Think Long Term
There are more tax benefits & incentives in long term investing. You will be able to ride out any waves in the market & the passive income produced will help supplement your day job.
4. Be Prepared to Put Down 25-30% in your Down Payment
Banks want investors to have “skin in the game”. This means that unless you are going to be an owner occupant they will want at least 25% to put down. If you want to live in one unit & rent out the other, you are considered an owner occupant & can put down as little as 3.5% & go FHA.
5. Look for Value
You can usually score a better deal if you are willing to put a little elbow grease into the property. Look at the rent rolls…is the property under rented? With a fresh coat of paint & some fixing up can you get a little more money per unit?
Ask for referrals for contractors & make sure they are skilled. Handymen are great for small fixes, however, you want a good plumber, electrician & HVAC contractor in your pocket. Good contractors are your best friends & will ensure a broken water heater will not eat up your profits for the next 3 months. Maintain your properties mechanical systems annually in an attempt to avoid a “disaster”. Do your research & know what things cost. Use a Realtor well versed in investment real estate so they can help you crunch the numbers & even help you procure & screen your prospective tenants.
7. Screen Your Tenants!
We always run a credit report on all of our tenants. It really helps to weed out the potential problem tenants. Don’t be so desperate to rent that you take anyone! Having the home vacant for two weeks is less expensive then dealing with a problem tenant or worst case scenario the eviction process.
8. Understand Your Rights as a Landlord
Get a referral for a good real estate attorney who specializes in tenant/landlord disputes as well as the eviction process. Find out their fees. Read & research to understand your rights as a landlord.
There are many tax benefits to owning investment real estate. You want to make sure you are being advised properly & make your money work for you.
10. Enjoy the Advantages!
Rental properties can offer a great passive income stream to supplement your day job while working & through retirement. Make sure you take advantage of the options offered to you! Pat yourself on the back for helping to secure your financial future.
You can search for multi family real estate right here on our site!
As they say Location, Location, Location. Check out our neighborhood write ups to learn more about Philadelphia’s many neighborhoods.