Are you considering purchasing a beachfront condo and turning it into a vacation rental unit? Or, perhaps buying a fixer upper with the idea of “flipping it.
Real estate has always been a sound investment, but like any venture, it’s best to be well informed before investing a large amount of money. Consider these tips before making any financial commitment.
Down payment. Unless you put down 20% for the home in which you’re currently living, know that you’ll need a much more substantial down payment for your investment property. Given that mortgage insurance isn’t available, you will need at least 20% for an investment property.
Property taxes. It’s important to consider property taxes when buying an investment property. As an investor, you might be charged at a higher rate than owner-occupants. A home that comes with high property taxes may not be ideal for many, since the taxes will eat into your profits.
Insurance Costs. Insurance costs will cut into your profits. Before you zero in on a specific location, it’s important to remember that certain areas will increase your insurance rates more than others.
Location. It’s important to choose an area wisely. The location you choose is just as important as the property itself. While it’s hard to put yourself in the shoes of tenants you haven’t yet met, there are certain factors to consider. For example, a good school district; a neighborhood with low crime rates; a street with well-maintained homes; easy access to major corridors; and with close proximity to entertainment.
Condition. There’s nothing wrong with buying a fixer upper. In fact, many property investors romanticize the notion of turning an ugly duckling into a beautiful swan. But, don’t get caught up in the fairytale. Be realistic about your time, budget and skill set.
Enlist the help of a professional. Reach out, so my team and I can help with your search and purchase. Having an agent can streamline the process, and we have the most current information on properties and neighborhoods that fit your investment profile.