A Helpful Guide to Buying Your First Investment Property

Image Source

Buying your first investment property is exciting but incredibly daunting. You’re taking money that’s perhaps been sitting in your bank for some time, and now you’re investing it into a physical asset.

However, when it comes to real estate, it’s probably one of the strongest and most valuable assets that you could invest your money into.

With that being said, if you’re looking to buy your first investment property, then here are a few helpful tips to get you started.

1. Understand your finances and set a budget

Buying an investment property costs money, and it’s important you’re aware of all the costs that come with buying one. Not only from just buying the property, but every cost that comes with it, whether you decide to flip it for more money or rent it out for the long term.

You’ve got maintenance costs, decorating costs, and then all of the legal fees and estate fees that you might need to pay as part of the sale.

Understanding your finances and knowing what you’ll need in terms of a budget will help you know exactly what you need before committing to this type of investment.

 
2. Are you flipping it or renting it out?

What would you like to do with the property? Flip it for a higher price by renovating or renting it out for either the short-term or long-term?

Both have their advantages and disadvantages. For example, flipping a property involves knowledge of building and renovation. Outsourcing it will cost you more money, and there’s also no guarantee that you’ll be able to add value, especially if you overspend on the costs to do it up. However, do it right and you can make a sizeable profit on the property when selling.

Renting it out is great as a long-term investment, but you have to be mindful of agency fees as well as the chance that you might have problem tenants who don’t pay or empty periods of rental. A credit union can be helpful to consider if you’re looking to renovate the property.

3.Get pre-approved for any loans

Pre-approval for loans on the property is something that’s worth getting ahead of time in order to not waste the time of those you’re looking at when it comes to seller properties.

Getting pre-approved will make sure that you have the ability financially to buy the property, and that will hopefully speed up the process of the sale as a result.

By doing this, you’ll also get your foot in the door when it comes to viewings, as some realtors might not let you view properties if you’ve not been pre-approved for the loan required to make an offer on the property.

4. Research locations

Locations are an important factor when it comes to your first investment property. Regardless of whether you’re buying to sell it on or keep it, you’ll want the location you pick to be the right one to attract future buyers or renters.

Think about what locations you’re considering currently, and identify where the best properties are in the area for you to buy.

5. Consider your next property investment

It’s helpful to consider what property investment you want to make next, as diversifying and expanding your portfolio is good practice for any investor.

Use these tips so that you can buy your first investment property with ease this year.