How to Research and Purchase a Good Investment Property
by: Elaine Voncannon
How to Research and Purchase a Good Investment Property
How much do you really know about investment property? Accurate
research and professional expertise applied to the purchase of an
investment property builds a solid foundation for financial success.
You may want to work with a REALTOR who can help to identify the
great opportunities in investment properties in the area of your
choice. Or, you may choose to do the work on your own. A REALTOR
can provide the inside line on properties with potential in the geographic
area where you are looking for property. If you do choose to work
with a REALTOR, you will save time, and you may have more choices
and opportunities.
Research the Property’s Past and Present
Some essential information must be obtained
about the property’s
past. For example, do you know the history of the property, or even
how old it is? What sort of upgrades have been made to the home?
Is the roof waterproof, and is the plumbing and electrical in working
order?
What’s the Neighborhood Like?
Once the overall condition of the property has been assessed, tax
assessment records must be examined to determine property value trends.
A good REALTOR will be familiar with the neighborhood where the property
is located and if he or she is not, the REALTOR should check the
neighborhood at different times of the day and night and speak to
some neighbors. If there is a homeowners association, check the guidelines,
assess fees, and be certain they allow rental of properties.
Assess the Bottom Line
For what purposes are you, the investor, going to use the property?
To rent? To house your business? Or, to rehabilitate the property
and sell it at a profit? Once this is determined, you can assess
the bottom line.
Are you paying cash for your investment property? If not a mortgage
will have to be paid. Have your REALTOR determine if rent and applicable
fees will cover the mortgage, property management and maintenance.
Consider property management if you do invest in property. Research
fees and services provided by different property management companies,
or ask your REALTOR if they provide this service, because many do.
If you do not want to collect rents and contract repairs, find a
property manager with the skills to negotiate, be your intermediary,
and facilitate business in your absence. For investors who rehabilitate
and sell buildings at a profit, a decent turnaround is 60-90 days
from the time of purchase to the time the property is put back on
the market. Three to four contractors should be researched and they
should provide written bids with time estimates on their projects.
Document Fund Availability with Your Offer
Once you find that dream investment property,
don’t forget
that offers need to be accompanied by your financial institution’s
statement of fund availability or a lender’s approval letter.
This will help make certain your offer will be accepted over other
offers that may not come with appropriate paperwork.
There are still plenty of great deals on investment properties in
this real estate market, and there are some less than desirable properties
as well. Do your research. Or, hire a professional who will do it
correctly for you. With proper planning and decision making, your
real estate investment should be a profitable and worthwhile endeavor.
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