Life gets hectic and busy. We all do our best to maintain our homes, but there are some tasks that are easily forgotten. Whether you're planning to sell your home in the near future, or simply want
Home Buying Tips for Investors
Buying a home as an investment is a vastly different process than buying a home for yourself. One of the primary differences is looking at properties purely from a financial lens, and not through emotional attachment. If you're looking to dip your toes into real estate investment, there are a few home buying tips of investors that you would be wise to heed. At Augustedge we're experienced in helping people find wise investments, and our trifecta is able to help you with all sides of the equation. Come talk to us today if you're interested in investment properties!
Tip #1: Determine your funding
When buying an investment property, lenders typically require a much larger down payment. There will also likely be stricter lending requirements than a traditional home buyer. Some investors will sidestep the lender by obtaining financing from a private or hard money lender. Your first step in real estate investment is to determine where your funds will come from, and exactly what the size of your budget is.
Tip #2: Determine your operating expenses
In order to make a wise financial decision, you must have a comprehensive understanding of your operating expenses. These expenses go well beyond a mortgage! You need to calculate insurance payments, maintenance expenses, taxes and unexpected issues that may arise (including not being able to find a tenant at times). Knowing your net operating expense will help you accurately estimate your net income, and therefore determine whether a property makes sense.
Tip #3: Examine your rate of return
An excellent indicator for whether the investment is worthwhile is the rate of return. For every dollar you invest in the property, what will you gain in return? There are other factors to consider as well, such as appreciation. Consequently, it is a personal decision to determine what rate of return is worthwhile for you to make an investment.
Tip #4: Invest in a low-cost home
Ultimately, a property with minimal expenses will be the best for your bottom line. As a general rule, the more expensive the home, the higher your ongoing expenses will be. Investors should always have a professional and thorough inspection so they have a solid understanding of the quality and condition of the property. This will help you avoid purchasing a money pit instead of a cash cow.
Tip #5: Location, location, location
Your profitability, as well as long term return on investment, will largely depend on the location of your property. When looking for a rental property, you want an area with low property taxes, good schools, and lots of amenities. In addition, most experienced investors will encourage you to buy neither the nicest nor the worst house on a street. At the end of the day, if you choose a great house in a poor location, you will struggle with both finding renters and making money on your investment.
From farming in Warden, WA, to living in Australia and then back to Wenatchee, Iâ€™ve always been profoundly aware of the fundamental need to help others. Whether through their financial picture or he....