How to Buy a Home for Investment

Buying a home for investment is not something that you should do without a good amount of consideration. However, with research, buying an investment home can be a great way to plan for the future. Historically speaking, housing prices have gone up, and with the risk of inflation, real assets may be the best way to go. Consider your financial status to make sure that you are not overextending yourself, comparative research to check that you are not paying too much for the investment property, compare rental averages to see whether an investment property would be worth it and consider the location to make sure that people will desire that area in the future. If you consider these basic factors, you are well on your way to making an educated decision that could pay off.

Common Pitfalls

A common pitfall that people often face is they do not keep enough money in reserve to weather rental fluctuations. Rents have historically risen, but at times rents do go down and there will be times where the investment property will receive no rents due to vacancies. Another pitfall is to assume that there will be no or few maintenance issues. There will be times where the air conditioner, oven or something else breaks. Finally, some make a mistake in assuming that interest rates will not go up and they opt for an 5-year loan. It is probably best to get a 30-year fixed rate.

Where To Buy

Buying a house is in some ways similar to buying a car. First, you need to know the current inventory. Start with some online study through a website like realtor.com. After you gain a sense of what is available, then you can start looking for a realtor. Even though all realtors have a database of all available properties, local realtors know the market the best and they are the ones who can be the most helpful. If a realtor is not helpful, do not be afraid to look for another agent.

Cost

Costs are completely variable depending on location. Posh cities like New York will cost much more than a small suburb in Ohio. Your decision should be based on whether the rent or rents will cover the mortgage and the extra costs of maintenance and taxes. If the math works out in your favor, then you might have a great investment property.

Insider Tips

When putting in a bid for purchase, always negotiate. Offer at least 10 percent less than asking. Usually the seller will meet you somewhere in the middle.