Things to Think About When Exploring Potential Investment Properties
A good investment property can act as a reliable source of passive income for decades to come. As such, there’s little wonder as to why so many families hang onto investment properties for generations.
Still, this doesn’t mean that every property you come across represents a sound investment, and assuming that one investment property is as good as the next is pure folly.
So, to help ensure that you don’t get stuck with an investment property that places a strain on your finances and facilitates massive regret, take the following things into consideration when scoping out prospective properties.
How Good is the Location?
You should never purchase an investment property without doing some research into its location. Whether you’re looking to rent a property out or sell it for a profit, location can have a tremendous impact on how much you’re able to make with it. So, while the overall condition of a property is undeniably important, its location may ultimately be the primary factor in determining its profitability.
So, before committing to purchase an investment property, take some time to educate yourself on its location. For example, you’ll need to get a feel for how much demand for housing exists within this locale. Is this an area to which new residents are flocking? What’s the median income?
What are long-term growth projections? How safe is this area considered? Finding the answers to these questions will provide you with vital information for making an educated investment decision and lessen your odds of being stricken with buyer’s remorse.
Fortunately, proper location research doesn’t have to be a tremendous drain on your time or energy. Such research can generally be conducted from the comfort of home, and any seasoned real estate investor – or real estate investment company – should be able to walk you through the basics of how to invest in real estate online.
What Are Similar Properties in the Area Selling For?
When carrying out your location research, make a point of checking out local property values. If you find that similar properties in the area have much lower asking prices than the property you’re looking at, request an explanation from the seller. Should the seller’s rationale prove inadequate, request that the price of the property be lowered to reflect what similar properties in the area are selling for.
If the seller refuses to lower the asking price, this may mean walking away from a property with which you’ve become enamored. And while this can always be upsetting, the resultant disappointment is preferable to overpaying for a property that has no business carrying as large a price tag as it does.
What Kinds of Problems Does the Property Have?
Many of the investment properties you look at are going to have pre-existing problems. In some instances, these issues are fairly minor and easily fixable.
In others, they stand to dramatically impact the value of the property. To help ensure that you’re given an accurate accounting of all a property’s outstanding issues, insist on having a pre-purchase inspection carried out by a certified home inspector. In the absence of professional inspection, buying the best home insurance may prove impossible, and you’re liable to find yourself discovering massive issues with the property long after the sale has been finalized.
A certified home inspector will be able to identify an extensive range of problems that are unlikely to appear on the radars of nonprofessionals. Once the inspection is complete, obtain contractor estimates for fixing any problems the inspector has identified.
Ask the seller to deduct the cumulative cost of repairs and/or renovations from the asking price. This will allow you to budget for, let’s say a bathroom renovation for your commercial property; to guide you through the renovation process, you can reach out to professionals at onepointpartitions.com. Upon refusing this request – or refusing to allow an inspection – walk away from this deal and look for another.
It’s easy to see why so many investors flock to desirable investment properties. After all, the prospect of decades of healthy returns is simply too good for certain investors to pass up.
However, this doesn’t mean that you should throw capital at every potential investment property that enters your sphere of awareness. In the interest of ensuring that your money is only put towards profitable properties, remember to take the factors outlined above into careful consideration.
Sumona is the publisher for SBNewsRoom. Besides her professional commitments, she is also used to spending time sharing sentient blogs regarding genres like current affairs, health, and traveling. Follow her contributions in SmartBusinessDaily and RealWealthBusiness