Essential Tips For Buying Investment Real Estate
If you are looking to buy property that will make you a profit instead of living it in yourself, there are some things you need to think about first. The following tips are a good way to start looking into buying investment real estate.
Get Your Finances in Order First
Before you even start to look at investment property, you need to look at your financial situation. Start by getting a copy of your credit report so you know where you stand. If your credit score is on the lower side, try to pay off some of your debt so you can increase the score. This will help to lower the interest rate and reduce how much you pay for the mortgage loan. When you pay less in interest, you are able to profit even more from the investment property if you end up renting the property. You should also make sure you have a decent down payment to further increase your chances of being approved for a loan. You should also apply for the loan before starting to look at properties so you know what property prices to look for.
Unless you are experienced at renovating and flipping houses or rental property, you should avoid fixer-uppers. While the initial purchase price might help you save money, you will end up paying more in remodeling costs if you need to hire a contractor. Down the line it might be good to start flipping property for more investment opportunities, but when it is the first property you have purchased for investment purposes, try to get something that is already in good condition. You don't want to do much work before you are able to rent out the property or re-sell it.
Know Your Operating Expenses
It is also a good idea to calculate your operating expenses when buying investment property, especially if you intend to buy property you will rent out. Whether you are buying a large apartment building or buying empty land to build a business building, you need to know what the approximate costs will be. Consider the various costs associated with owning rental property, such as paying your administrative and maintenance staff, paying for repairs and cleaning costs, managing the interior and exterior of the property, and paying legal costs.
If you are going to buy investment property, it is highly recommended that you have an attorney specializing in property law. They will be able to file the paperwork for you and handle any legal issues that might come up.