There’s little wonder as to why good investment properties are so highly sought after. Whether you’re looking to flip a property and sell it or use it to generate rental income, the right investment property stands to net you a handsome profit. Of course, this isn’t to say that every investment property you come across is a guaranteed moneymaker. So, if you’re looking to generate a sizable ROI with your first investment property, don’t forget to consider the following factors.
Insufficient Location Research
It is impossible to overstate how important proper location research is to property investments. No matter how much a property has to offer in terms of amenities, there’s a good chance it won’t be able to generate the desired returns if its location leaves a lot to be desired. So, before committing to purchase an investment property, make a point of thoroughly researching its location.
For starters, your location research should entail a deep dive into local property values and rent prices, as this will give you a good idea of how much you can expect to make from an investment. Additionally, if you discover that similar properties in the area are selling for much lower prices than what the owner is asking, you’ll be well within your rights to request a reduction in price. You’ll also need to do some research into an area’s local economy, job market, population and growth projections, as this will provide you with a solid understanding of how much housing demand exists within this area. Furthermore, take care to calculate the property’s cap rate. If you’re currently asking yourself, “What is a cap rate?,” the term refers to the number derived from dividing a property’s net operating income from its asset value. Make sure that you choose the right agent or agency for your property search so you find exactly what you need before making a big life decision. Here’s how an exp enterprise can help lead generation with kvcore and improve your home search.
What Do Inspections Reveal?
Investing in a property that hasn’t undergone a professional inspection is never a good idea. Even if a property appears to be well-maintained and problem-free, you’ll be taking an enormous – and unnecessary – risk by forgoing inspections. For one thing, you, as the buyer, have nothing to lose by insisting that professional inspections must take place before any deals can be finalized. Seasoned pros are highly adept at identifying issues that the rest of us are unlikely to notice, much less register as serious problems.
Additionally, the results of these inspections will give you a good idea of how much work a property requires before it can be rented out. So, once you’ve received the results, reach out to various contractors and obtain estimates. Knowing how much the work is projected to cost will provide you with a solid understanding of how much the property is truly worth – and whether this is even an investment worth pursuing.
Do You Want to Be the Sole Investor?
Although real estate can be a lucrative area of investment, rental properties are far from small purchases. So, if your experience in real estate is limited or nonexistent, it’s easy to see why you’d have reservations about spending so much money. Anyone looking to save money and share the risks associated with investing should consider real estate crowdfunding.
As the name suggests, this practice involves pooling your capital with other investors and purchasing investment properties as a group. To further minimize risks, these properties are typically found by people who specialize in seeking out safe investments. Of course, since you’ll be one of numerous investors, you won’t make as much money from a property as you would if you were the sole investor. So, if massive returns are what you’re after, the crowdfunding route may not be for you. Still, if you’re a newer investor looking to learn the ropes, real estate crowdfunding is certainly worth considering.
A good investment property can be one of the smartest purchases you ever make. Whether you’re looking to invest in a rental home or rental community, the right property can be a financial boon in both the short and long term. However, investing in a property without doing the proper research is liable to have the opposite effect on your finances and place a considerable strain on your resources. For instance, if you plan to invest in a timeshare property, it is very important to have the right understanding of the pros and cons of getting a timeshare, and how to get out of a timeshare contract when something goes wrong.