Preparing to buy an investment property
June 8, 2011
It's hard not to hear the rumblings. Experts and talking heads repeatedly say real estate can be a lucrative investment, especially for home buyers who buy at the right price and secure affordable financing. However, for someone who has never done it before, real estate investment can be a tricky topic. Bankrate.com offers a few tips for
homeowners who think they are ready to become a real estate investor.
The term "real estate investor" covers a wide breadth of roles. There are people who want to be a landlord and dote over their own property's day-to-day care and management. Others simply want to purchase the property and let someone else handle the management. Still others may be interested in fixing up run down properties and re-selling them, or starting from scratch, buying undeveloped land and building something on it. Bankrate.com reports the first-time investor may want to stick with residential investment until they become more comfortable with the
Don't be short on funds
Home buyers may want to speak to a financial advisor to see if they actually have the capital needed to invest. Whether they're becoming a landlord or commercial investor, a home buyer needs substantial cash reserves to cover periods of time when they won't have tenants or the market is slow, according to Bankrate.com.
As always, location, location, location
Just as they would if they were buying a home to live in, real estate investors need to focus on location. High-population areas are ideal for the home buyer-turned-landlord, since they attract renters looking for easy access to work, retail locations and public services. An ideal investment opportunity would be situated between shopping centers, schools and public transit, Bankrate.com reports. Such a property would
also attract future buyers if an investor decides to sell the property down the line.
Look for an experienced real estate agent
Bankrate.com reports a home buyer considering property investment should partner with a real estate agent who knows the local investment climate and can find them a property that will bear substantial returns over time. Additionally, the investor should plan to keep a strong relationship with that real estate agent, since they could help them re-sell the property and find a new investment opportunity in the future.