5 Tips for Buying Your Very First Investment Property
In the past decade, the housing market has been one of the best investment tools, providing outsized returns and a steady stream of income to countless individuals. If you'd like to start making money from real estate, it's not too late to join in. Buying an investment property in Charlotte, NC could be a great move because the housing market is extremely hot right now. Let's go over some top tips for purchasing a house or apartment.
5 Tips for Buying Your Very First Investment Property in Charlotte, NC
1. Monitor the Market for Several Months or Years
If you don't know what the current market conditions are, it'll be very hard for you to find a good deal. To discover what the average property sells for and what kinds of homes are on the market, you should sign up for various alerts and mailing lists several months or even a year before you're hoping to buy. That way, you can follow the market's movements and get a better feel for the kinds of homes that do well.
In some cases, it can even be helpful to go and have a look at properties on the market, even if you're not yet ready to buy. Additionally, you should find out more about local contractors and the ongoing cost of owning a home. How much does a kitchen refurbishment cost? What does the average homeowner spend on annual maintenance? And what are the legal requirements to rent out a home? You'll need to find out the answer to all these questions.
2. Get in a Good Financial Position Before Buying an Investment Property
Unlike more passive investments, real estate can come with significant additional costs. While a house or apartment provides an excellent return when it is consistently rented out to a good tenant, several things can go wrong. For example, you might find out that there is structural or internal damage, or it might be harder to rent out the place than you imagined. Sometimes, a tenant may not pay their rent, or they could damage the property due to negligence.
Therefore, you must be in a strong financial position before purchasing your first property. Consider all the problems that could come up and what each one would cost, then make sure that you can cover them all. Your home will likely be a great investment, but you must make sure that you won't go bankrupt should something go wrong.
3. Look Into Various Financing Options
Some people pay for their investment property in cash, but this is rare. Most homeowners use leverage in the form of a mortgage to purchase more real estate than they could otherwise afford. Lenders are likely to require a down payment of 20-30% for an investment property, so you will need to save up this amount. Additionally, there might be property management, landscaping, and insurance fees.
Before you dive in, explore all options. You can likely get suitable offers from several lenders if you have good credit. Compare the various offers and find out which one is the best for your current situation.
4. Choose a Property that Offers Great Value for Money Spent
Not every home on the market is an equally good investment. Many sellers charge 10-15% more for their home simply because it is well-kept and there are no cosmetic flaws. Since you'll likely refurbish the home before renting it out, there is no reason for this extra cost. Instead of choosing an immaculate home, you could opt for a property in need of updating, which is often available at a much more reasonable price.
The best way to find such homes is to work together with a property company like Better Path Homes. We buy houses from owners who don't have the financial resources or time to sell traditionally, and we can work with you, the investor, to update and refurbish the house. That way, you can get a great property at a discount.
5. Get Ready to Be a Landlord
Most people looking to buy an investment property believe that being a landlord will be easy. But this isn't necessarily the case. If you decide to rent your home out on your own without the help of a property manager, you'll have to deal with issues like showing tenants around the property, referencing, and collecting rent. Additionally, you'll have to deal with contractors whenever there is an issue.
Make sure you understand what being a landlord entails before you dive in. If you'd like a more hands-off approach, teaming up with a property manager could be a good idea. However, you'll have to pay them up to 10% of your profits.
Buying an investment property in Charlotte, NC is one of the best ways to build up a regular stream of passive income. If you're interested in getting started, you should monitor the market to see what is currently available, double-check that you are in a good financial position, and find out what kinds of mortgages you can get. That way, you'll be ready once a great deal comes along. Call us now at Better Path Homes to join our investor mailing list.