Are you new to buying property investments? Taking the leap into the world of real estate investments (flips and long-terms) can be a wild ride, but not so wild if you have the right person to be your sounding board and to guide you along every step of the way! Along with the right real estate agent (step #1), here are five additional vital steps for buying an investment property.
Know your down payments and interest rates.
Financing the purchase of an investment property is not the same as purchasing an owner-occupied home. Mortgage insurance isn’t available for properties you intend to rent, so expect to put at least 20 percent down. Also, interest rates are different for investment properties—work with your lender to have an understanding of investment property interest rates.
Are you renting or flipping?
Different strategies apply to each scenario. You’ll need to know this going into the deal because each have their own different strategies that should be applied.
Flipping a property requires much upfront cash and energy to buy, fix, and sell. Working with Brent Hyland can alleviate a lot of the leg work on flipping a home by being the buyer/seller’s agent and working as the GC/design on the remodel.
Renting requires fewer, less expensive repairs, but it will take longer to make your initial investment back. Rental properties require long-term commitments for maintenance and finding tenants, but they offer long-term, passive income, which is a plus.
Local economy
Understanding the local economy and the areas you intend to invest in goes a long way and/or having a knowledgeable real estate agent that is going to work on your behalf. Some things to consider are:
- Does the city show a lot of new employment growth?
- Does it mainly rely on dying industries?
- How is the real estate market or rentals in the area?
Research the market
Look through local listings to get an idea of the going rental rate or asking price for comparable homes or apartments. Some things to consider and think about while researching are:
- Are other rentals offering incentives like free months?
- Is there a waitlist for rentals in the area?
- Is the home or apartment updated?
- Prices: higher or lower?
- Is there a lot of inventory?
Repairs and other costs
Do the analysis of what repairs, closing costs, insurance, etc. will cost you in the end.
If you are flipping, Brent will work with you and give you a clear picture of all the fees in closing, repairs that need to be done, and what the property can sell for after the renovation.
If you plan to rent, it’s best to avoid major, expensive repairs. Because renting is a long-term investment plan, you want to minimize your upfront cost.
Now that you have an understanding of buying an investment property, are you ready to invest? Contact Brent Hyland to see what he already has scoped/priced out for you to invest in today!
Brent Hyland
Coldwell Banker-Clarendon Hills
(312) 315-3565
brent@hylandhomes.com
