Buying investment property is stressful. Buying investment property typically means taking your personal tastes out of the decision.
But, paying close attention to details that will make the home pleasing to future tenants. Here are some basic tips for buying investment property.
Tips for Buying Investment Property
Unlike with some personal home loans, investment property mortgages generally require at least a 20% down payment. Make sure the properties you intend to buy are something that you can afford.
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You should attempt to get pre-approved for a mortgage before you start the search. It would be awful to find the perfect investment property but be unable to secure a loan.
Narrow Down Your Options
There are probably hundreds of properties for sale in your area. It will save you time if you narrow down your options in advance. Here are some questions that you can ask yourself before you start searching:
What type of property do you want – house, condo, etc.? Are you looking for a single family residence or a multi-family unit?
Do you have a specific area in mind? How many bedrooms and bathrooms does it need to have? Is there a minimum square footage that you need? Are you looking for a newer or older home? What areas can be rented out for the monthly amount that you will need to cover your costs?
Once you have those answers and your loan pre-approval in hand, you or your real estate agent can start the hunt.
Close the Deal
Once you find the investment property that will work for you, it’s time to negotiate the price. It’s stressful to wait for the back and forth communications but have patience.
This is a property that you intend to make money on. There is no rush. Feel free to make offers lower than you would for a home that you intend to live in since there are usually more fish in the sea with investment property.
Once you agree on the selling price, you can start the closing process. That will mean that you contact you will need to fix the interest rate on your mortgage, go through the final approval process, and sign the closing documents.
This can be as stressful as the price negotiations, but the end result should be owning a property that will make you money overall.
Do you have any specific tips on buying an investment property that I missed? Any pointers for parts of the process?