Things To Consider When Purchasing Real Estate
Real estate investment is a great way to earn income and leverage your hard-earned money. Through rental income, appreciation, and profits, real estate can generate consistent returns while diversifying your investment portfolio. Whether this is your first time investing or you are experienced beyond your years, there are fundamental concepts that can help with your success rate when it comes to real estate. Take a look at our list of things to consider what will significantly reduce your stress level, and make sure that your real estate investment is a sound endeavor.
Gauge the Market
While there is no reliable way to know exactly what the real estate market is going to look like or do, a real estate investor has to be aware of the trends.
Buy at the Right Price
While some markets are less expensive than others, a “right” priced investment property is determined by the price tag and the risk level. Think about the price point to rent the property, the price to purchase the property, the potential cash flow, and appreciation potential.
Buy in the Right Location
Location is one of the most important factors when purchasing real estate. Buying in the right location will increase your likelihood of generating profitable returns and finding/keeping the right type of tenant.
Determine whether the investment is worth the expenses. Take into account the financing details (mortgage, loan, interest rates, closing costs), expenses to maintain the property (maintenance, insurance, property management costs) and potential income generated from the rent collected each month. Ask yourself, is the investment worth the calculated expenses?
Establish Management Process
Think about how the property will be managed. Will you manage the property yourself? If yes, think of the following:
- How will you handle tenants, leases, security deposits?
- Do you understand the laws when it comes to evictions and tenant rights?
- Do you know how to establish a process to collect rent and enforce late fees?
- Do you have a plan to manage hostile tenants or a breach of the lease?
Not interested in taking on the challenges listed above, think about hiring a property management company that understands the local market and can price your unit correctly while also helping you fill vacancies and maintain the property.
Before purchasing the home, make sure to identify any necessary repairs that need to be done to the property. Understand the budget required to make those repairs and be ready to hire a licensed contractor who can complete the tasks in a timely manner and correctly. It is also smart to make a plan to handle ongoing repairs when tenants move into the property.
Establish the Property as a Rental
Once purchased, make sure to register the property as a rental. Also, set up an escrow account for security deposits and know how these funds can be used in your specific state. Each state is slightly different, and the laws are very specific on how the funds can be allocated.
Market the rental property for the tenant you want for the long haul. Focus on the positive attributes of your property and use the proper outlets to find a tenant that would be a good fit. Use multiple online and offline resources to market your property.
Find the Right Tenant
When finding tenants for your property, make sure to vet applicants. Plan to interview the individuals, pull background information, check references and also request proof of employment.
At Oak City Properties, we’ve streamlined the experience of purchasing and owning investment properties through a trusted and reliable mindset built on decades of measured success. Our team of real estate and investment professionals is ready to help you manage your most significant assets through a hands-on approach that focuses on consistently generating results. Want to learn more about our commitment to effective real estate investing and property management? Give us a call at 919-232-9222 or send us a message.
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