A Brief Property Investment Guide: 5 Simple Tips
Despite the occasional ups and downs of the market, real estate is always a reliable investment with a lot of potential.
As home prices continue to rise, it’s clear that real estate is an investment that will only grow with time. But, does that mean investing in real estate is a good idea for you?
Read on for a quick look at five simple property investment tips why real estate may–or may not–be right for you.
Ask Yourself Key Questions
Before you even think about picking up an investment property, it’s important to consider if it’s right for you.
Do you have time to invest doing some work to the property if needed? Are you comfortable with doing repair work? What about dealing with renters?
While you could hire out repair work that needs to be done or allow a property management group handle the renters, things like this will cut into your profits. And if you’re just getting started, you may not have a lot of profit to share.
Squaring these issues away first will help you get a clearer understanding about the deciding if you should invest in property.
Do Your Homework
When looking for an investment property, it’s important to do your homework and know what to look for.
While many homes might look like good investments, problems could be lurking inside. Knowing what to look for in terms of condition and construction quality is important.
For example, being aware of what areas of your city or town will be best to rent out is important too, along with the types of property that will generate the income you’d like to bring in.
Get Your Finances in Order
Investments require money, so it’s vital that you have a clear picture of your finances and what you can afford.
You must be prepared to cover maintenance or other costs that come up early on or even before you start bringing in income. If you know you want to invest in real estate property down the line, you can start structure a financial plan and start saving today to cover the cost of your dream home.
Understand Your Margins
As you look at the cost of property and consider the income that could be collected, keep your potential profits and expenses in mind.
Aim for a profit margin you’re comfortable with and that will provide the income you need, but keep costs in mind too. Insurance, taxes, and maintenance can add up quickly, so make sure you have accurate estimates of these costs and can comfortably cover them with your estimated income.
Start by calculating your estimated mortgage payments, then do the math on your other costs.
Look For Properties With Potential
Perhaps the most important thing to consider when looking for investment opportunities is the property’s potential. Even property that is in poor condition or in need of some major updates can be worth it if the potential is great enough.
While you’re shopping, make a list of key points that an ideal investment property might have like location, school districts, or proximity to retail or transportation.
Property investment can pay off big time in the long run. The recurring monthly income from a rental home can add a real boost to your monthly income and the potential long-term resale value is another major benefit.
For more on this subject read our recent blog, “Summer Real Estate Trends.”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Our team of local experts will ensure that you have a successful real estate transaction. Call us today at (858) 361-5561 or email us anytime by clicking here.