When it comes to investing in real estate, even seasoned investors will need an effective plan of action to ensure that they get the maximum return on investment. There are many major metropolitan cities that are filled with opportunities that you can take advantage of if you understand what to look for when it comes to buying properties.
Here are the five things you will want to look for when it comes to investing in properties.
- Type of property
First and foremost, you would like to search out the type of property that you simply feel comfortable investment in. It can be a turnkey property, used for generating passive income or flipping a property for a quick profit. Single family homes are considered one of the most effective investments and if you’re getting to invest in them, ensure to take few things into account.
– purchase Well Maintained Homes
– Buy as Owner-Occupied, then Sell for better Rates
– Avoid costly Homes for cash Flow purposes
Expensive homes require too much of an upfront investment to manufacture cash flow. However, you should buy a well maintained or a newly rehabbed/built home because they increase your chances of getting the best Return of Investment (ROI).
There is an previous phrase, “Location, location, location”, that makes perfect sense if you’re planning to purchase investment properties.
The neighborhood plays a important role in determining the worth of the property and the desire people have to rent it. Generally speaking, the better the location, the more likely the house can be rented successfully. while a more expensive neighborhood is usually preferable but it is not a necessary pre-requisite as long as the neighborhood is safe. There is no single factor more important than neighborhood safety. If the neighborhood is unsafe, property values will remain low. renting properties in these areas will also be troublesome.
- Vacancy Rates
One simple way to check the potential value of your investment property is checking the vacancy rate of other similar properties within the same neighborhood. Although a vacancy expense is factored in, if this expense is underestimated, it will severely impact your cash flow. So, if vacancy levels are high in your neighborhood, it might mean that your potential investment might not live up to its potential.
- Exit Strategy
Never invest in any property till you know how it will finish. whether you’re interested in flipping the property or keeping it for the long term, knowing how your relationship with the property will end is very important. you will also need to have contingency plans in case your original ideas don’t pan out because of unforeseen circumstances. Work on an exit strategy with an experienced investor to guarantee that you are making a profitable investment.