If you’re considering investing in a rental property, industry experts are suggesting that the current market, fertile with affordable home prices combined with historically low interest rates make this the best time in years to become a real estate investor. When you consider the fact that money is cheap to borrow and the availability and price of rental investment properties is attractive you have a winning formula for return on investment. In my continuing series of real estate tips for buyers below are some tips if you are a first time investor and want to get in the game!
Become familiar with all of your options. It’s critical to get to know all of the available categories of investment properties out there. For example do you want to own, rent and maintain the property or perhaps buy and sell the properties like commodities. Are you interested in buying raw land and developing it? Many first time investors will choose to start out with a residential apartment building which is already generating monthly income. Residential property can be very easy to obtain from a mortgage perspective and if in the right location will begin to pay for itself from day one.
Establish a partnership with an experienced professional. Choose a realtor whose client portfolio already includes investors or someone who you have worked with in the past and knows a little about your tastes, abilities and financial situation. Another option is to connect with other like minded investors with more experience to gain insight into the market and more importantly learn some pitfalls to avoid. If these relationships prove to be fruitful you may want to consider partnering with a more experienced investor on your first transaction. Your contribution of capital (combined with their experience) and an open mind can provide one of the best investment training experiences available.
Seek out the optimal location. This is especially important if you intend on renting the property. As in buying a home for eventual resale the concept of location – location – location holds true for investment property. Residential properties whether single or multi family tend to attract higher rents in more highly populated areas, near transportation hubs, shopping and amenities or colleges and universities.
Have your financial ducks in a row. Have a conversation with a lender or financial professional to see if you have the financial wherewithal to accommodate the ebb and flow of investing. There are costs associated with any type of investment property, such as vacancies, repairs, and rehabilitation costs if you are planning to fix up a property and immediately attempt to re-sell it.
Build a network of support resources. While you may have the initial desire and financial resources to acquire the property you will need to considering other disciplines such as an accountant, attorney, contractors, lawn and exterior maintenance, and janitorial services. The place to begin to build this network is with your real estate professional, often times he or she can make sound recommendations that are based on prior experience and already contain a working relationship.
Having an experienced real estate professional guide you through the process also takes the emotion away from the transaction. Remember that you are making an investment and need a qualified representative to be in a position to ask the questions that make sense.
Coldwell Banker Encinitas Realtor Linda Moore has been helping buyers, sellers and investors of all kinds find properties that make sense since 1990. Her keen eye for the right (and profitable) investment opportunity has resulted in measurable financial success for many of her clients.