Investing in real estate is a solid strategy for building wealth, and anyone interested in a truly diverse portfolio will want to think about finding a great investment property for future portfolio growth. One of the interesting facets of property investment is the fact that finding a good investment is something anyone can do with a moderate amount of research.
On the other hand, investing in the stock market often requires significant study about business, market trends, and a host of other items that impact the health of a stock price. If you’re searching for a solid, long-term investment, here are some basic tips to get you started in finding a great investment property.
Beginning Your Investment Property Search
You may think it would be most convenient to own an investment property in a location that’s very close to your own home; however, you’ll probably have a property management company handling the “day to day” responsibilities of keeping your tenants happy and the property in good condition. Before narrowing your search to a few specific properties, spread your net far and wide to a variety of neighborhoods.
While you might think investing in an expensive property in an exclusive neighborhood will garner the most investment value, there are many other features that impact the value of a particular property, even if it’s not in a “high rent” district. Consider the following:
- People like to live close to work. A lower-income neighborhood near jobs will see low vacancies (a good thing) and near constant rental activity, which is essential for building investment property income.
- Up-and-coming neighborhoods are hot. An established neighborhood is where you want to buy a house in which your family will reside. An up-and-coming neighborhood is where you’ll find a more affordable investment property that will grow mightily in value over time.
- Property management companies help you scale your investments. Your investment property could be just the start of a series of property investments you make. Using a property rental management company means you can invest almost anywhere and have someone on-site or close by to manage.
Consider Old Properties During Your Search
A brand new, turn-key property might seem like the best investment, but the return-on-investment of a less expensive property might actually be higher, especially if you can conduct some minor renovations and make an old property appear almost new. Consider that you could probably get a duplex that’s thirty-years-old for the same price as a brand new, single-family condo in an expensive building.
Although you might see greater equity added to your portfolio with a single-family home, the largest gains in value don’t necessarily come from the newest properties. In any real estate investment hunt, it’s best to consider a wide array of properties at different price points, in different neighborhoods, and of different ages.
Think Twice About Fixer-Uppers
When conducting an initial search on a real estate listings website, avoid sorting your results from least expensive to most expensive. Properties that seem too good to be true are always too good to be true and usually require significant work, inside and out. You may wish to visit the property with an inspector who can point out the trouble spots around a property.
Some expensive items that may cost you dearly to replace include:
You should expect to perform some upgrades and repair to get your units ready for tenants, but it’s important to make sure those renovations won’t require tens of thousands of dollars immediately after you take possession of the property.
Maximize Your Real Estate Investment With HUNTAHOME
Are you embarking on your first real estate investment journey? Are you interested in a home property management company who can help you manage your properties for maximum performance? Our experienced team is here to assist with your residential property management needs. Contact us today to speak with our team.