It’s not a stretch to say that wanting to buy a profitable investment property is the goal of real estate investors. Do you know what you can do to ensure that you find those profitable properties? Here are some tips.
Here is a common sense tip. Buy low.
Paying above market price for a property makes absolutely no sense when looking for investment properties. Especially if they will need updates or work done to them to make them either rentable or resalable.
Even properties in good shape should be purchased at a lower price. Keeping your expenses low is important to profitability. A higher priced property will mean higher mortgage payments. If they are so high that you can’t set rents high enough (because the local market won’t support it) to offset it, you’ll be in the red before you even start.
Another tip is to be sure to buy properties that don’t need a lot of repairs or replacements.
Again, this keeps expenses down. Typically, if a home shows with obvious repairs in sight, imagine the repairs that are out of sight, behind walls, under floors and so on. What looks like a small repair can end up costing thousands of dollars. Finding properties that are sound, especially after being inspected, is something that you should look for, and be willing to pay a bit more for. Caveat to that is the preceding paragraph.
I’m sure you’ve heard the saying “location, location, location” and it’s true.
Buy properties in locations that are in places that lend to better rents or resale of the property. Look at the type of property you are buying. If it’s a single family home, are there good schools in the area? Parks? If it’s a multi unit, what is around the area? Is there a college that will mean renting to students? Singles or younger couples needing a space close to work or entertainment? Location is key.
Buy smart and make money.