Investing in property as a rental or in order to flip it can be a tricky business. That’s why if you’re looking to make the most out of an investment you need to be smart and have a plan going in.
We’ve put together some tips to help you get more bang for your buck so that you don’t go in blind and wind up purchasing a money pit. You can’t protect against everything, but it always helps to do your research and be prepared.
We all know that data is key to success in any business. One of the ways to get the data you need on any investment property is to have a property report drawn up by a property research company. These reports are useful for anyone from first-time homebuyers to major real-estate developers.
Some of the things included in a report are median sale prices, market comparisons, the estimated property value, and properties sold in the area. This gives you an idea of the estimated price of the property vs the relative value compared to sales and other metrics. This lets you know whether a property is worth flipping.
Getting approved for an investment property loan is difficult, even under the most ideal circumstances. Waiting until the last minute to try and secure financing can see a deal fall through and even see the property you were looking for being snapped up by someone else.
Start by researching investment property loan types to see what kind of financing you actually require and the terms and conditions of an investment property loan. When we talk about protecting your investment, this also means having favorable terms and conditions to repay the loan on the property should require one.
Having time to shop around and compare rates will give you an advantage in the long term. While there is sometimes a time limit when buying an investment property, rushing too soon into an arrangement that is unfavorable can eat into your profits or potentially put you at a loss should things change.
If you’re planning on buying the property and becoming a landlord, such as using it as a full-time rental, you can certainly make some money. It is important to understand the upfront risks that investment properties carry though. Even properties you intend to flip have certain risk factors attached that are not to be taken lightly.
Firstly, understand that, even with an investment property loan, that you likely will have to have cash upfront and be able to afford certain costs for a period of time. These can include mortgage payments, showing the property, maintenance, and other costs. Part of getting the most out of your investment means understanding what it will cost all-in to own an investment property and planning accordingly.
Partnerships are a beneficial asset in these cases. Having someone available to help offset the management responsibilities as well as the upfront costs can make the entire process more bearable and profitable in the end.
Property investment is a great way to build a sustainable income over time. In order to avoid going underwater on investment property, it’s important to take the steps necessary to put yourself in the proper position to be profitable.
We hope these tips will help you protect yourself and your investment when you’re ready to make the leap into an investment property.