ONE: Know Your Investment Criteria First.
Before making any investment you need to know what your financial objectives are. Are you looking for a stable investment for retirement with little downside but provides a stable and reliable income? Looking for a more expensive single family residence in a great school district may provide added stability, a reliable income stream, with lower risk.
Are you looking for a longer-term investment that produces the maximum income. Investing in less expensive houses and holding them for the longer-term may be the risk level you want. Often lower priced homes will be riskier with more upside return. You may get higher income for the money and experience more appreciation in the long-term.
TWO: Separate Investing From Operations
Just like financial brokers help manager your money, a local property management firm can assist you in renting and maintaining your investment property. Property management firms can handle the day-to-day management tasks of rent collection, repairs, maintenance and leasing.
While some people will choose to self-manage their investment property, property management firms can save you a lot of time and money. These firms typically charge between 7-8% of the rent and they mange properties for a living. Another benefit is that property management firms may allow you to buy investment properties outside of where you live.
THREE: Don’t Limit Your Investment Property Search to Where You Live.
If you lived in Atlanta, Georgia, you wouldn’t buy a Coca-Cola Stock just because they were headquartered near where you lived. You would make the best financial decision you could make. Say you live in an area of limited growth, but you knew that Boise Idaho was one of the fastest growing communities in the USA, would it be smart to invest in the Boise market. It would!
You couldn’t buy an investment property for $150,000 in Seattle, Denver, or San Francisco, but you could in Boise, Idaho. Perhaps investing and hiring a property management firm in Boise would allow you to diversify your investment portfolio, take advance of the rapid market appreciation and secure a more stable income for yourself.
FOUR: Real Estate Investing is a Marathon, Not a Sprint
You might be familiar with all the reality home flipping shows where someone buys a fixer-upper, fixes it up and sells it for a fast profit. While that may be a way make a one-time profit, real investing in single family homes is completely different. It is about building long-term wealth.
Don’t be influenced by the short-term fluctuation in your real estate portfolio. You may only own your investment property got a few months before a tenant moves out. Don’t be spooked. Your next tenant may live there for several years before moving out. If you buy a nice house in a nice area your income and asset appreciation should be quite lucrative over time. Invest for the long term. Use your real estate investments as a wealth building engine and to diversify you overall investment portfolio.
FIVE: Finding a Great Agent
Don’t try and go it alone. Finding a great real estate agent can be extremely beneficial. Great agents study the markets both local and nationwide. They keep current on new laws and represent you in all negotiations. A great agent can mean the difference between buying an investment property or buying a GREAT investment opportunity. Building a relationship with an agent can help you regardless of where you are buying your next investment property.
ROB SCHOPKE, Realtor