How to Choose an Investment Property

How to choose an investment property

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Okay, so the stock market is tanking, Certificate of Deposit (CD) rates are terrible, the economy is slowing, so where is the silver lining? Real estate investing. As long as the federal bank is keeping interest rates low, opportunities look good for the real estate investment property.

Buying a house is more affordable than ever. Bank loan rates are attractive and the average home price is at an all time low adjusting for inflation. Still there are pitfalls, so here are some ways to make a sound investment in a home.

There are three ways to handle your investment property:

1- You can become a landlord and manage it yourself
2- You can pay a property management company to do it for you
3- You can fix it up and sell your real estate right away

In this good rental market, it is wise to hold it for a while, collect rent, and then sell it when the market improves in a few years. Look at it this way, if you were buying a CD, the only way to get a decent interest rate would be to select a maturity date of five or more years, so why not do the same with an investment property?

Stick to residential

First time investors should stay with residential real estate, not commercial. It is too expensive and the competition is too fierce. You’ll need extra capital to pay for repairs and improvements on your investment property.

Don’t put all your money down

There is no need to pay as much as you can on the down payment, because interest rates are historically low. Let your remaining money work for you. Besides, you’ll need it for unexpected costs. Most economists expect inflation to rise, so your investment property will be a hedge against rising commodity and home prices.

Check out the area

Take the time to scout the area, looking for grocery stores, quiet neighborhoods, schools, and nearby shopping centres, taking the time to write everything down. Avoid rural areas and inner city areas. Look in the suburbs and in crime-free neighborhoods. Look for trees, nearby parks, and good environments for raising children.

Talk to the residents

Use the expertise of local residents. This is instrumental, since they know the area, and what would be invaluable to homebuyers.

Avoid much older homes

Unless you are an expert in home repair, don’t go for older homes, as they might have plumbing issues, electrical problems, roof leaks or other major repair items that will adversely affect your investment property.

By using these suggestions you should be able to make a wise investment that will pay off much better than any of the other investment options available today.

If you plan to buy or sell a home, visit today.

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