One of the best investments you can make is in real estate. As long as you know what type of property is best for an investment, it can be very rewarding. When it comes to investing in property, buying a rental property will offer the biggest reward with the least amount of risk. If you buy a multi-family unit, the rent for just one or two units will pay the mortgage and the rest will go in your pocket. When you start shopping around for rental properties to purchase, there are a few things that you should for.
Buy Properties That Are In Good Shape
More and more people today are buying fixer uppers for a low price and they plan to fix them up for a better return. This sounds good, however, it usually doesn’t work out this way. In many cases, the rehab ends up costing much more than the investor thought and it takes a lot longer before they see a rent check. It is best to buy a property that is in good shape so that you can tenants in right away.
Buy Properties in Moderately Priced Areas With Good Cash Flow
When you are investing in real estate, the location is very important. Properties that are located in prime locations such as near the beach and in wealthy areas often have negative cash flow. This isn’t what you want. You should look for properties in working class areas. The location may be boring but the cash flow is great.
Properties That Already Have Quality Tenants in Place
The best building to buy is one that already has good tenants living there. This will save you the trouble of finding new tenants. It will also save you the trouble of painting and cleaning the unit to get it ready for new tenants. The best part is that the tenants’ security deposits will be transferred to you and you will start receiving rent checks as soon as you close on the property. Having people already living in the building is the best scenario possible.
Properties in Low Vacancy Areas
It is a good idea to buy a building in an area where there are very few vacant buildings. High vacancy areas tend to bring crime, vandalism, and squatters. If you buy a building in one of these areas, it can be very difficult to find quality tenants who are willing to move to the area. If you see a building that you like, you should drive through the neighborhood around dinner time. This will give you a chance to see if there are cars in the driveways and if the lights are on in the other houses on the street. If the neighborhood seems like a ghost town, you should keep looking. If you cannot fill the units, you will start losing money the day that you close on the house.
Investing in rental property isn’t risky and it can offer a nice reward as long as you find the right place. As long as you know what type of property is best for an investment and you follow the tips listed above, you have an excellent chance of buying a great piece of property.
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