Buying an investment property is a bit different to buying a home. Since you won’t actually be living in the property, at least not in the long-term, there are a number of different things to consider. If this is your first investment property, read on for some useful tips to steer you in the right direction.
What Type of Tenant Are You Hoping to Attract?
Most investors buy property with a view to installing a tenant, either in the long-term, or for short-term holiday lets. Think carefully about what type of tenant you are hoping to attract, as this will influence what type of property you buy. For example, holiday lets work best when they are in a tourist town or on the beach, whereas young professionals will probably be interested in apartment living in the city. Once you have decided who your ideal tenant is, you can start looking for a property to suit.
The Right Location
Location is important. Rental income is a factor, so it makes sense to buy a property in an area that fits your target tenant, e.g. if you are hoping to attract a family, look for a family home within easy reach of local amenities and good schools. However, the other main consideration is capital gain.
Some properties appreciate more than others do. The hard part is figuring out where the best area to invest happens to be. This is where an experienced realtor comes in, as they know the local property market inside out and should be able to advise you on which areas are on the up – and which areas are sliding downhill at a rate of knots.
Find an Experienced Realtor
An experienced realtor such as Roost Real Estate will come in pretty handy if you are buying your first investment property. Realtors know the local area and can offer you advice on the local property market. Pick their brains on rental returns and what type of property is in demand. With their advice, you could end up buying the perfect investment property, but if you go in with your eyes wide shut, it could be an expensive mistake.
There is little point in looking for an investment property without funding in place. If you are a cash buyer, great, but most property investors use equity or a mortgage to fund their first purchase. Look at your option and speak to a few lenders to see whether you for their lending criteria. If you plan to let the property out to tenants, you will need a specialist mortgage, as well as a deposit.
Look for Property Bargains
There are always bargains to be had in the property market – and unlike a homeowner stuck in a chain, you can afford to be patient. Bide your time and look out for foreclosures and property auctions. This type of property is usually sold at below market value, so it represents excellent value for money. However, you will need to move quickly and have your finance in place.
Property is almost always a good investment, but look at your options and take professional advice before you buy.