Buying an investment property can have a big impact on your financial future. Real estate is a way to leverage more money for retirement, education expenses, elderly care or as an emergency liquidation tool. An investment property can also give you another revenue stream if you choose to rent the property.
But how do you know what property to invest in? You need to do your research to determine your return on investment. Here’s a few things to consider:
Will you be renting out the property? If so, are you going to be the call person? If the answer is yes to both of these questions, then the scope of your search should be close to where you normally reside. You need to know if the neighborhood is appreciating. This can be determined by looking at Labor Statistics, business development (new business arriving nearby), crime statistics, green spaces like parks, school ratings and the feel of the neighborhood.
Who would be buying or renting your investment property in the future? You need to have a good understanding of who likes to live in the area that you are focusing on. A neighborhood that is very family oriented needs housing that is inclusive to family living like a single dwelling home with two bathrooms. Neighborhoods near colleges and universities are going to have a high turnover of students looking for short-term housing options.
Cost to Maintain.
With every property, there are annual costs. Costs on your investment property can include property taxes, homeowners insurance, extra insurance demands like flood insurance, possible condominium association fees, and internal or external maintenance. You will be smarter to be realistic in these values.
One of the best ways to accumulate a real estate asset, is by buying it in cash. There are some real gems for the cash buyers that can offer a high return on investment. However you choose to approach your real estate investment, work with a Realtor that you can trust. They are going to help guide you and often have a great deal of knowledge regarding neighborhoods and possible appreciation. Good luck growing your wealth!