Investment properties can make or break you. In the best-case scenario, you’ll find a property that has been well maintained. Well maintained means free of pests, electrical or plumbing problems, roof damage, health hazards, ill-equipped systems, or dilapidated condition. Renting out the property may be simple with high return on investment. However, one unfortunate deal of worst-case scenario could mean thousands of dollars in repairs, construction, fines, or worse: demolition.
If this isn’t your first rodeo, you know well what you can expect. But if this is your first time in the investment property arena, you’ll need to do your homework and consult with professionals to determine your best course of action.
Determining Your Big “Why”
What’s your reason for buying an investment property? Are you looking for a house to flip? Do you want a vacation home? Are you seeking a property you can rent out? Is this a property you plan to sit on until the market trends change? What are your short and long term goals when making this kind of real estate transaction? What do you have to gain, and what are you willing to lose?
No matter what you see on television or read in magazines, real estate investing is not a get-rich-quick scheme. You may experience an impressive ROI, or you may be taking a gamble in which you can potentially lose your shirt. Know why you’re in-it-to-win-it before you make the commitment.
Investment properties are meant for those who can truly afford the finances and the risks. If you’re struggling to get by, have mouths to feed, and are seeking a solution to your monetary problems, back out now. Turn around. Do not pass go. Do not collect $200. This isn’t for you.
However, if you’ve got a few bucks in the bank and are backed with financial security, if you can afford to take a possible loss, then move forward, but do so with caution.
Avoiding the Rip Off
Buying an investment property is a big risk. You’ve got a lot to lose. Buying a property sight unseen in an area with which you’re not familiar ups the anti on investment anxiety.
Not only do you need to secure a viable property at a profitable price-point, but you’ve also got to be familiar with city codes, laws, and regulations. You’ve got to grasp neighborhood nuances, economic conditions, and market trends in the area. You’ve also got to be aware of weather conditions to determine what effects Mother Nature may have in store for the property you purchase.
Long story short, research. Research. Research. When you’re finished researching, research some more.
Building a Team You can Trust
Members of your team will include a top-notch real estate agent who is in it for the long hall, not just for a quick buck. You may opt for a management team who can help rent the property and oversee the day-to-day details. You’d do well with a handyman or company equipped to handle any fix-it repair tasks that arise. And if possible, a scout – a man on the ground – especially if you’re buying an investment property in an area in which you’re unfamiliar, someone who can “watch your back” while you’re away.
Real Estate Investing Things to Think About
• Property insurance may be higher.
• Renters may not respect the well-being of the property, so you may find yourself re-investing between residents.
• Market trends fluctuate. What the house is worth when you buy it may not hold the same value when you decide to sell.
Tips for Finding the Right Real Estate Agent
• Seek out an agent who has experience with investment properties.
• Seek out an agent who has experience with the type of property you’re considering buying. Examples include luxury homes, waterfront homes, multi-unit properties, etc.
• Read reviews online.
• Ask around. Your friends, family members, and associates in the area you’re buying usually present the best recommendations or warnings.
Investment properties aren’t for everybody. But for those who know their big why, have a solid team, industry awareness, and the finances to back it, investment properties can be extremely rewarding.
Your best source for real estate and community information is your real estate agent. Contact Juan Leal at 305-982-7405 to learn more about local neighborhoods, discuss selling your house, or to tour available homes in Miami and surrounding areas.