July 28, 2020
What To Look For in an Investment Home
Are you considering purchasing an investment property? The world of real estate is a great place to make some extra money. However, it also takes quite a bit of money to get started!
While it can be a worth while endeavor, you want to be sure that you consider many different aspects of investment ownership before diving in head first.
Here are some tips for searching for your investment property:
Find the Right Location
If you purchase an investment home in an area that won’t attract renters, you have put yourself in a bad place. Be sure to consider the neighborhood, school zones, local shopping,and surrounding cities for the home that your purchase. If the area is declining, you will want to stay away.
Instead, look for a location where the population seems to be growing. You also want to look for low crime rates, parks and family activities, low property taxes and a growing job market.
Consider the Down Payment
Down payments when purchasing an investment home are different than when looking for your own home. Typically where you can put down 1-10% down, investment properties require closer to 15-20%. They also do not qualify for mortgage insurance, as well as have a stricter approval rating.
Before finding the property you want to purchase, deal with the finances first. What can you afford? Dealing with this beforehand will allow you to narrow in on where to look, what to look for, and how soon you can purchase.
What is the Condition on the Investment?
How interested are you in buying a fixer-upper? If you aren’t looking to get your hands dirty, you will want to be sure that the home that you buy doesn’t call for much repair. You will want to think through both the time and the cost that it will take to make whatever changes are needed to the property. Are they worth it? Do you have the resources to make such changes? These are just a few of the questions to ask yourself.
While there might be some cosmetic changes you wish to make, the major repairs will have to be made before you can rent out the property to tenants. Many times once you start making these changes, more will surface. So, while you might want to pay less in the beginning, it could be worth it to pay for the more expensive home that will last you longer and cause you less stress!
Purchasing an investment home is no easy task and not one that should be done on a whim. Before investing your time and money be sure to do a plethora of research to know where you should buy, what kind of property you can afford, and to what extent you want to have to make changes to the home. It’s a fun and worthwhile endeavor and once you’ve counted all the costs, give us a call for all of your mortgage and lending needs. We’d be glad to guide you through the process!