Buying an Investment Property

by c21commonweath_ldowling 18. November 2019 12:45

Are you thinking of buying a house as an investment? While most experts will tell you that buying a home you plan to live in probably isn't the best investment idea, buying separate investment properties makes sense for many people.

Whether you're buying a house to keep as a rental or you're just planning for a quick flip, there are a few things to consider before making the purchase. Here are our top four tips for finding the right investment property:

Location, Location, Location

It’s one of the oldest clichés in real estate, but no attribute matters more than location. It's the one thing about the property you can't change. If your investment property is in a bad location, no amount of renovations, upgrades, or improvements can fix the area—in fact, having the best house in the neighborhood can hurt you in the long run. Consider the location and be smart about your purchase.

The Cost of Maintenance

Every home needs regular maintenance, and maintenance costs money. If you're able to do the repairs yourself, you can save some cash, but be realistic about your abilities. If the projected cost of maintaining your property substantially lowers your expected ROI, the best move is to walk away.

Condition of the Property

If a property is in poor condition, it doesn't necessarily mean you should pass on it. A house in poor condition could go for an especially low price. A smart buyer can even use the home’s condition as leverage in their negotiation. For some buyers, especially those looking to flip houses, buying a fixer-upper is the most intelligent choice.


Estimated Return on Investment

Before you make any investment, whether you're buying real estate, stocks, or even a set of collectible Red Sox plates, it's important to consider the expected return. If you're buying a rental, you must compare the income you receive in rent to the cost of maintenance, property tax, and other expenses. For a flip house, you’ll estimate the cost of repairs, upgrades, and selling the home and weigh it against your expected profit.

Whether you're looking for a rental or you want to get into house flipping, buying investment property has proven successful for many—however, it can be risky. Before you sign that contract, make sure the property is right for you.