19 Sep Buying An Income Property–Where Do I Start?
Buying An Income Property – Where Do I Start?
So, you’re looking for an investment… We’ve all heard the phrase ‘location, location, location’… when you’re buying an income property you need information, information, information!
Working with an experienced Realtor is important but to truly have a grip on your portfolio you need to develop a plan and know it like the back of your hand.
Step 1 – Pick a goal
Why did you first become interested in buying an income property? Do you want ongoing cash flow or are you planning to use it for your retirement fund? Think in terms of how much income you’re looking to generate and the time frame you want to work with.
Step 2 – What is your strategy?
What investment strategy are you planning to follow? You could do house flipping, rent-to-own, buy and hold, a mix of flip and hold, or a joint venture with an investor. Your choice of strategy will depend on a bunch of different factors including available funding and risk tolerance.
Step 3 – What can you afford?
If you are buying a second property you will need to find a lender and a minimum of 20% for the down payment. Make sure you are approved for financing before potentially jeopardizing an offer.
Step 4- Talk to an investment real estate expert
Your Realtor should be able to help you narrow down some options for potential properties. The information you gathered in the previous steps will help them find an income property for you based on your investment strategy.
Step 5 – Compare your options!
Look at the numbers on each investment property to compare and make the best choice for you. Take into consideration your mortgage and tax payments, utilities, vacancy allowance, estimated budget for repairs, upgrades and property management.
Step 6 – Buy your income property
It’s time to invest! You’ve crossed your t’s, dotted your i’s and found the right income property for you. Buying your first income property doesn’t have to be a complicated venture. An experienced Realtor should make the process easier by offering insight and guidance.