7 Things You Need to Know Before Buying an Investment Property
If you’re buying an investment property, there are things you should know before you begin finalising your first deal. During a property investment transaction, there are a lot of financial factors in play and making the wrong decision could cost you a great deal of money.
Buying an Investment Property
Being armed with the right information means you can make investments with confidence. Before buying an investment property, there are several things to consider.
Through education and experience, you’ll be able to maximise profits by making smart investment choices.
1. Determine the Interest in the Property
Before your deal is finalised, it’s a good idea to see what kind of interest there is in the area and the property. Determining how your investment will perform depends on how the current market is performing.
If there is no desire or need for a certain property, your investment may cost you. Before buying the property, consult a professional about the state of the market so you can gauge how much need and interest currently exists in the area.
2. Get to Know the Area You’re Buying In
If you’re not familiar with an area, you should thoroughly research it before making an offer on a property.
You need to know if the area is worth investing in and if your vision for the space, either developing or selling, can be accomplished.
3. Liens Against the Property
With any property purchase, and especially with an investment property, it’s standard to review for liens.
If there are any, they must be paid prior to the transfer of ownership. You do not want to be responsible for any debts assigned to the property.
4. Your Plan for Development
Buying an investment property is about making a purchase to turn a profit. You should have a plan and execution strategy in place.
It’s important to research the property and the area well in advance so you know if your vision can be not only carried out but can also be successful.
5. Regulations that May Apply to the Property
If you’re purchasing a rental property, you’ll want to know of any existing regulations. According to real estate agent Lisa Krause, knowing what you can charge in rent will help you determine the investment’s value.
Make sure you’re aware of all regulations and have regulatory pricing calculated into your profit margins.
6. Condition of the Property
It’s always a good idea, when buying an investment property, to know its physical condition. You should first see it in person, and then get an inspection done by a certified professional.
Determining whether the property is move-in ready or if it will require repairs will impact the overall value of your investment.
7. Secure Funding in Advance
If you’re not using cash, make sure you know in advance if all of your funding is secure. The sale will be faster and easier if you’ve secured funding prior to making an offer.
Get a pre-approval from a bank or letter of guarantee from another investor to show sellers that you’re serious and to ensure a smooth transaction.
Hire a Consultant
If you’re looking into buying an investment property, it’s important to be educated and aware of all risks and benefits. Consider hiring a consultant to assist you with the purchase of an investment property.
Knowing in advance what you need to keep in mind will help you make the most out of your investments.
Buying an investment property is a big decision and making sure you’ve lined up funding, gauged the market, and developed a plan, is paramount to making your purchase successful. Learn more through our free video training or contact us today for more information.