An Investment Property is a property that was solely bought for the purpose of generating income for the buyer. These are most common for people who make renting, reselling, and leasing out properties an active means of income – this is the way they get money for needs, wants and everyday life. Getting into buying Investment Properties works well for those who have a lot of money saved up that won’t be used or needed in the foreseeable future.
If you have the money, time, and resources, buying property for the purpose of an investment may just be the best thing you can do. However, as with all investments, the return on investment and profit is not guaranteed, and going into the business of investment properties is a high-risk high reward game of chance. With this, we’re here to equip you with the basic know-how of buying an Investment Property to make sure that your investment will turn into a profit.
Location Is Everything
Buying a property in the right location makes or breaks your investment. With this, don’t be too trigger-happy and just buy any location that becomes available, you want prime locations for your investment properties to make sure they are resold immediately. To know whether a location is a prime location make sure that it is near to the following, meaning there is one within a 30-minute drive or within a few blocks away from the property:
- Residential Area
- Recreational Centers (Parks, Cinemas, etc)
- Groceries and Convenience Stores
Being near these establishments ensures that your location can cater to any demographic you want so make sure you do just not look at the property itself but the neighborhood and check into having all these within the vicinity before you decide to buy that property.
Ensure You Are Filing The Correct Mortgage Plan
Although a mortgage seems like a one size fits all kind of plan, it actually varies depending on the kind of property you’re buying. When buying an investment property, make sure you’re getting the right mortgage for it. Some of the most costly mistakes people who get into this business makes is having to change their mortgage plan mid-way and/or having to deal with all the additional fees after. Extra costs incurred by applying for the wrong mortgage reduce your profit, take up your time, and honestly make the whole investing thing a hassle. Get yourself a trusted realtor or even just a trusted lawyer who specializes in this and set up your mortgage the proper way.
Find The Lowest Property Tax
It may not be as high a priority as all the factors needed when getting a location, you should know that your profit will only be after your take out all the costs incurred in buying an investment property, that includes all the taxes you’ve paid, including property tax.
The good thing is, not all cities and states have the same property tax. Find areas with a low property tax to make sure you have a high profit and so that you can maximize your earnings.
Ensure You Have Potential Buyers
As you go into this business, it’s important that you’re starting to build a network of buyers and sellers and basically just get your foot in the door of property selling. Build the connections and attend the proper events to be able to build up a roster of leads whether obtained through organic or inorganic means to be your potential market and eventually your potential buyer once you’re ready to sell your investment properties.
Once you’ve look into making sure you are taking all these four things into consideration, you are now more equipped to buy a property for investment purposes. Just make sure that you have the patience for it as profiting through this kind of business is a long process that needs a lot of effort and legal know-how from you and your trusty team of lawyers and realtors if you choose to employ some. Put in the time needed and soon enough you’ll be seeing the results of your efforts.
Lastly, we want to reiterate that while it may seem easy, buying investment properties Is a huge risk to take, and the way to combat and minimize risk is to make sure all the steps you are taking are with basis and through informed decisions. It would be wise to employ even just a realtor who is knowledgeable about this to help you out and ensure your high-risk high reward stake ends up with the highest rewards possible for you.