Bargains
One of the best places to look for a good deal on an investment property is sheriff sales or auctions when land or buildings have been repossessed. If you are lucky, you can get a much lower price than the market price for the investment property. A repossessed investment property is generally sold “as is” and many require a few repairs, so you should be sure to inspect the condition of the investment property; sometimes serious renovations are needed and are simply not worth the discount ownership price.
Location
When searching for an investment property, keep in mind the location of the land or building. While an apartment building in a neighborhood surrounded by boarded up houses may have an attractive sales tag, the appearance to potential tenants will not. It is also important to know that an investment property will earn much more revenue in a busy town or city where housing is always needed. The country is a less ideal location because you have to worry more about vacancy and the amount of rent you are able to charge, which can sometimes make your investment property more of an injury. Beach property can be a rewarding investment property as well if in a popular tourist area. Many people will pay a pretty penny to rent a place located on the beach during the summer months. Of course, this kind of investment property is more expensive at the buying price, but the returning proceeds are extremely gratifying.
Tenant Numbers
The number of units you can rent out is another important factor you should consider during your investment property search. The more units an investment property has, the more tenants you can have to pay rent. More units per investment property also mean a larger down payment, but if you can fill all units in a relative amount of time, the profits will start accumulating soon enough. For example, if you purchase an investment property that has three units which you can rent out for $600 a month per unit and you have a $1200 a month mortgage payment for the entire investment property, you will have an income of $600 a month. And if you are able to keep all three units full the whole year, you will have a total annual revenue of $18,000 from one investment.
Future Problems
While the thought of an investment property brings dollar signs into your eyes, there are other factors you should consider. There could be periods of vacancy in which you might not even break even with a mortgage payment. Even if the investment property is in relatively decent condition when you purchase it, there will most likely be repair and maintenance issues in the future. And problems with tenants or other areas may crop up in time. Whatever type of investment property you are looking for, you should be always be aware of all the factors involved when choosing the investment property that is right for you and your goals.
By Monica Drusch