When you are investing in real estate, you will be using a large amount of money. If you want to reduce your risk and make sure you are getting as much ROI as possible, it is critical to be conscientious as you proceed. Here are factors to consider as you move forward with your investment choices:
Your vacancy rate and the quality of tenants you are able to land will depend in large part on the neighborhood. Some areas will stick you with high permit fees and use other tactics that make it difficult to get tenants into your properties. Also be aware that buying near colleges can be difficult: you will see many students among your applicants, and it can be difficult to rent during the summer.
If the vacancy rates are low, that will mean you can charge higher rent. If there are many listings in the area, that could mean the neighborhood is in decline – but could also be a sign of a seasonal cycle. Research to find out which is the case.
When people think about what home they want to buy, it is emotionally charged. While it makes sense that you will be emotional when finding your own place, it is key for logic and reason to dictate your path when you are investing. Use you negotiating skills to get the lowest possible price, since the amount you pay will be essential in determining the ROI you are able to achieve.
Determining a fair and full estimate is essential before you move forward. Think of all aspects that will be involved in the property. Prior to buying, figure out how much you will have to get in a loan in order to purchase the house. Add in the expenses you will incur to fix up the property. What will your expenses be for maintenance and other elements of operations? Think about what you will be able to charge for rent. Subtract all your costs from that income.
If there was a homestead exemption with the prior owners, you might see a leap in property taxes.
You likely want to get a property that is relatively small for your first investment. As you make your initial foray into real estate investment, you are wise to choose a single duplex, condo, or apartment.
When you invest in real estate, it can be easy to take a misstep and end up with a property that gives you headaches and is slow to generate you the returns you envisioned. Considering the above factors will help you make a sound choice and see the profit that property investment can allow.