Tips for buying your first investment property

I’ve spent a lot of time researching, touring and managing investment properties over the years. I’m a firm believer that real estate is one of the best investments available, so I’ve not only recommended that to buyers and sellers at J. P. King, I’ve also invested in it personally. There are plenty of opportunities for current or curious investors to get into the business of being a landlord today, especially considering there are still plenty of soft markets. I wanted to share a few pointers that I’ve learned from my personal experiences as an investor.

Seek advice from seasoned investors on what type of property you want to invest in.

So much of what I’ve learned about real estate has come from talking to and surrounding myself with people who are smarter than me. As far as an investment property is concerned, housing in many areas provides excellent investment returns, especially when you factor in appreciations. When you determine what type of property you think would suit you best, seek out people that are already doing what you want to do. Ask what they’ve learned, what they wish they’d known, and how they got started.

Decide how long you want to stay in the investment.

Unlike many other investments, real estate in not liquid. If you’re not committed to a long-term investment, when it comes time that you’re ready to sell, it may take some time. Be sure you’re prepared — both financially and personally — to endure how long you’ll need to hold on to the property to see a steady return.

Determine if you want to be a landlord.

When I first started out with just one or two rental properties, I managed them myself. As the number of small rentals I owned increased, I hired a property manager to take care of the details for me.  Being a landlord can be a stressful job at times, and a water heater going out or a leak rarely occur at a time that’s convenient for you. You’ll need to decide which route you want to take.

Find the right partner.

If you decide you want a partner in your investment, be sure it’s someone that will bring special skills to the partnership. Whether it’s a spouse or a friend, make sure your goals are the same for investment timeframes, that you’re on the same page about who will manage the property, and that each of you knows his or her own responsibilities. Working all these details out on the front end will save time and frustration later.

How much do you want to invest?

Deciding a firm budget and securing preliminary financing commitments before you start shopping will streamline the buying process. Sellers typically prefer buyers whose financing has pre-approval, and having a firm budget will assure you’ve determined your goals and that you’re on track to attain them.

Bigger isn’t always better.

Many renters prefer a smaller, more affordable home. Even if a larger home is available at a good price, make sure it’s something that a renter would want to live in. Consider its location, amenities and what you would need to charge for rent each month. Each of those are often more important to renters than size.

Are you considering the real estate business for your investments? If you’re already a seasoned investor, what advice would you give?

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~ by Craig King on March 22, 2013.

One Response to “Tips for buying your first investment property”

  1. Buying the first investment property with the right process needs the right advice. I am thankful to you for guiding me through this article.

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