Many people turn to real estate as a way to diversify their investment portfolio. Depending on what you read, it can either appear like a no brainer way to achieve passive income or a daunting prospect fraught with risk. The reality, of course, is that property investment falls somewhere in between. There are a few things to keep in mind to maximize your earning potential and mitigate risk factors.
Think With Your Head, Not Your Heart
Investment properties are all about how the numbers shake out. Falling in love with a beautiful kitchen is not a reason to make an offer. If anything you will likely find a better value in a property that has yet to be updated. Renters will care more about new appliances than soapstone counters.
Consider Maintenance Costs
Maintenance is one of the larger variables in owning real estate. A detached home will need yard maintenance and will mean you hold sole responsibility for the roof, plumbing, and major systems but will have a larger resale audience when it comes time to sell. Condos and townhomes mitigate a lot of the maintenance issues by having a Home Owners Association (HOA) but at an additional fee not recouped when selling the property.
Select the Right Area
Location and cost are likely to be the top two priorities for a potential tenant. Proximity to employers or schools can be the single most important factor as to whether or not your property stays rented or remains vacant. When deciding on a particular area take stock of the current inventory and price range. You can learn a lot from others’ mistakes. Your agent can guide you on typical rent and demand for a neighborhood.
Gather Your Team
Depending on your own areas of expertise you will need to have a trusted handyman, insurance representative, attorney, and accountant to keep everything in order with your property. Your real estate agent can be a great resource for all of these needs. Additionally if you want to be more hands off and just let the checks roll in we do offer Property Management services at our firm. You can learn more about that here.
If you have the patience, funds, and supporting professional guidance it takes, you could start profiting quickly with the right investment property. I would love to share with you the knowledge I have gained in my experience managing rental properties and representing investors. Contact me to start looking or learn more about my analysis of the above properties.