Understanding the basics of real estate investing is the key to a successful property investment. Before moving ahead with any real estate investment, it’s important to recognize that purchasing an investment property is different than purchasing your own home as there are many decisions that will determine long-term success and your ability to obtain the financial rewards.
Here are some tips to help you understand the fundamental basics of real estate property investment:
There are several possible investment strategies to help you determine how to get the best return from your investment and achieve your investment goals. It is important for you to define your property investment goals and decide if you want to increase the value of your property over time or if you want to generate a steady rental income and increased cash flow.
There are various forms of property investment such as apartments, condominiums, duplexes, bungalows, commercial properties and vacant land. Before purchasing an investment property identify some properties, research geographic areas and conduct a rental income return on investment analysis. Do your research and make sure you understand that different types of property investments carry different returns and risks.
Flipping a property can produce a lump sum of money but it is considered a short-term strategy with higher risk. When you rehab and flip a house you need to purchase it below market value. It can be difficult to find the right property that is below value, which could involve plenty of time, work and money to manage. Investing means purchasing an income producing property for longer-term gain that can generate a cash flow regularly and consistently for you. The level of risk in holding a property over time is low in comparison to flipping a property.
Location is the key to a successful real estate investment as the location of a property can drastically affect its market value. To locate the right neighborhood for investment make sure you do your research and become familiar with the area of where you intend to purchase the property. Choose an area that is close to public transportation, shops, schools, parks and beaches. Look for areas that are going through development, which can impact the value of your investment property and ensures that you are buying in an area that has rental appeal.
One of the most important things to learn is your financing options when investing in a property. Be aware of your budget and how much money you can spend. You should make sure that your credit is in order and you can qualify for an investment property loan, especially if you do not want to tie up your own money.
While investment properties can help you build wealth, there are some potential downsides that a professional property management company such as HPPM can minimize for you. Among other helpful services, we can prepare a rental income return on investment, pre-qualify tenants, regularly inspect the property to ensure proper maintenance is being performed and field any tenant inquiries. Our skilled tradespeople will ensure that the integrity of your property is being retained.
Please contact HomeLife Peninsula Property Management for more information on how we can provide services to help you achieve your goals and protect property investment(s).