Purchasing an investment property is an excellent way for you to build equity and expand your portfolio. Although becoming a real estate investor is a gamble, if you play your cards right, you can make it a profitable career.
If you’re ready to start your career as a real estate investor and want to know what to look for, you came to the right place.
Read on to learn about these top 7 things to consider before investing in a real estate investment property.
1. Research Other Comparable Properties
If you’re in the process of acquiring your first or next investment property, the first thing you need to do is research other comparable properties. Start by looking at other properties in the neighborhood of your choice to get a better idea of the prices and flip potential.
If you know the property needs work, you should look at remodeled listings similar to get an idea of the profit margins. However, it’s also important you look at what other people paid for those houses before their renovation.
The more you learn about comparable listings you will increase your chances of making a solid investment.
2. How Long Was the Property On the Market?
Before you buy an investment property, you also need to consider how long it has been on the market. If the property has been on the market for a long time, it will lower the property’s demand.
The time the listing has spent on the market will also give you more insights into potential returns. For example, if the property has been on the market for a long time, it can also mean higher carrying costs.
It would be best to learn why the property had spent a long time listed on the market. Some properties are deal-breakers to buyers for several reasons, so you need to learn what they are before deciding to invest in them.
Not all renovated properties sell quickly, so you also have to keep this in mind.
3. What Is the Average Age of Homeowners?
If you’re in the process of searching for an investment property, you should also learn the average age of homeowners.
For example, if there is a majority of senior or retired homeowners, you’re looking at houses that require renovations. More often than not, older homeowners struggle to keep up and maintain these houses, which increases their flipping potential.
Also, senior citizens sometimes are downsizing or moving into a retirement community and can facilitate a smoother transaction.
4. How Old Is the Neighborhood?
It would help if you also kept in mind the age of the neighborhood when you look for an investment property. If the neighborhood has been around for at least 20 years, you can expect the homes to be a little older.
Older homes mean more renovations and more work. This also means that you might get a better deal in an older home and receive a higher ROI after you make improvements.
5. Consider the Population Growth
If you’re interested in a specific investment property, you also need to look into the area’s population trends. Start by examining the population growth trends in the area.
You need to learn this information to forecast the future growth of the neighborhood. You want to invest in an area that has seen future growth and will continue to grow in the foreseeable future.
If the population trends are not favorable, it’s a sign you shouldn’t invest in the area. You want your property to be in an area of steady demand.
6. What Are the Property Features?
Once you take a look at the area surrounding the property, you can pay attention to the property’s features. When you look at an investment property, not only do you want to look at the potential, but you also want to look at what it currently offers.
A property with many features will be easier to flip and could increase your ROI. For example, if open-plan kitchens are trending but the property does not offer it, you’re looking at having to knock down a few walls.
As you take a look at the property, make sure you pay attention to some of the most attractive features.
When you look at the bedrooms, you should pay more attention to the rooms’ size rather than the number of rooms. As far as the master bedroom goes, you’ll want to be able to fit at least a queen-size bed.
The last thing homeowners want is to share one bathroom with the entire family. When you look at investment properties, ensure there are several bathrooms. When it comes to bathrooms, more is more.
If you’re investing in homes, you also want to consider the size of the garage. Ideally, standard homes should be able to have a two-car garage.
Another thing you need to look out for is the layout of the property. In more modern homes, buyers intend to look for family homes with an open plan. While it was custom to have the house’s rooms separate, more modern homes have open plans.
7. Neighborhood Amenities
When you’re considering buying an investment property, you need to think about what the future owners want. For starters, if you plan to flip the home to sell to a family, you need to consider the school district.
Is the home in a reputable school district? For families, their children’s education is one factor they keep in mind when buying a home.
It would be best if you also considered the neighborhood’s crime rate before you invest in the property. Chances are you will get a better ROI if the property is in a safe neighborhood.
Are You Ready to Invest In a Real Estate Investment Property?
Now that you know about these things to consider when purchasing a real estate investment property, you can decide if this path is right for you.
Before you invest in a property, you should consider the home features, age of the neighborhood, amenities, and population growth.
Are you interested in an investment property? Start our loan application today and see if you qualify.