Buying an Investment Property
How can I determine if an investment property is right for me?
There are alot of things that need to be considered before you just go out and buy an investment property. Before you purchase an investment property, I would consider this as a wise rule. If things were to go wrong, would you live in this property? Ask yourself this, what would you do if you could not rent it out once you purchased it. You may find yourself living in the property yourself. So, choose the investment property wisely. Below I will list some key items you may want to put on your check list before you make a decision to invest your time and money.
1) First choose what type of investment property you are willing to buy. There are many styles of properties out there when looking. You may consider a townhouse, condo, duplex, triplex, high rise unit or a commercial property. You will find there is not shortage of investment properties on the market at any given time. Someone is always looking to get out from under a mortgage and sell to you quickly.
2) Can you afford to carry the mortgage note? Again, you always have to think of the worse case scenario in situations such as buying an investment property. Reason, who ever is renting from you could loose there job tomorrow. Even worse, it could take several months to serve eviction notices to get them removed from the property. Laws in every state vary on how the eviction process works, meanwhile you may be forced to carry the mortgage note yourself until you get the tenants evicted.
3) ROI. Make sure your return on investment is worth that hassle. Look at it this way. If you purchase a property and it required $10,000 worth of work, how long will it take you to recover that cost? Will you look to make up that cost in rent or in equity over time? A wise investment should be made up in equity. Selecting the right location and the agreed upon purchase price plays a big factor in this area. If you buy an investment property in a booming area, you could make up that $10,000 in one year. However, buying an investment property in a depressed area could take you up to ten years to recover that cost. So, consider this as a part of you buying your first investment property.
Here are some other web sites that may be helpful as well on buying and managing investment properties:
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