Find the right location – Your choice of location can make or break you when it comes to an investment property. Look for somewhere that has plenty of amenities, a growing job market, low crime rates, a decent school district, and low property taxes. You need somewhere that is in demand. The last thing you want is for your property to sit empty because you have chosen an unpopular area.- Determine how much of a down payment you will need – A lot of people underestimate the amount of money they will need for a deposit when it comes to investment properties. They assume that they will only need around five percent, as this is the down payment they made when they bought the home they currently live in. Unfortunately, it is not that easy. You will typically need at least 20 percent for an investment property, especially as mortgage insurance is not available for rental properties.
- You need to have a plan – You know what they say; when you fail to plan, you plan to fail. It may be a cliché, but it is true. If you plan to start a property portfolio, and you don’t have a plan of attack, you are going to take a wrong turn, as you have not mapped out where you are going and how you are going to get there. Paul Ognibene of Cohasset can help you put a plan together.
- Assess all of your options – A lot of people are so excited about buying their first investment property, and this can lead them to making rash decisions that they have not really thought through. It is important that you carefully assess all of the options that are available to you, so you can be sure that you make the best decision for your situation specifically. Once you have gone over that option, why not take a look at the likes of commercial property? There are many different avenues you can go down to make your investment property work.
- Be cautious of high-interest rates – You may think that the cost of borrowing money is low at this present moment, but it is important to factor in the interest rate. After all, the interest rate on a property for investment will be higher. Remember, there is no point in investing in the property if the mortgage payments are going to eat into your monthly profits too heavily.
- Don’t let your heart dictate – Last but not least, your heart should never rule over your head when it comes to buying an investment property. When buying a home, only about 10% of your decision is based on logic, and the rest is based on emotion. This is your home, though, so this is understandable. However, when investing, your heart should never rule your buying decision. Rather than negotiating the best price and outcome for your investment objectives, you will be more likely to over-capitalize on your purchase because you will let your emotions cloud your judgment.