There are many reasons that people decide to buy investment property. They may be getting their first house, and so they decide to pay a little bit more and get a multi-family home like a duplex or a house with a basement that they can rent out. Buying investment properties such as that allow you to have close control of who lives in your property and how well they are taking care of it.
Buying an investment property is often times one of the best ways to invest your money. It really is one of the best investment vehicles. Since you have someone else paying off your debt for you, it is almost as if you are getting free money. Buying investment property doesn’t come without risks though. You need to hope that you can find someone to rent the property to, you have to hope that they stay for an extended period of time, and you need to make any fixes or do any maintenance that comes up for your buy to let property investment.
How to buy investment property.
If you are looking for how to buy an investment property, then you have come to the right place. The first thing you need to consider is whether or not you can be a landlord. If you don’t think that you can take care of needed repairs, or if you don’t think that you can enforce the rules and deal with potentially bad tenants, then maybe it isn’t the best idea for you to buy investment properties.
If you may struggle with the above things, but you still are interested in buying a investment property, then you could consider using a rental agency to manage your property for you. You will have to pay them though, and that will definitely cut into your investment, but it also makes it a lot more hands off. This is especially important if you want to get a rental property that is outside of the area that you live.
One good thing to think about with regards to buying investment property, is how long you will be owning that property. The longer you own it, then more you will get back once you do decide to sell it, but that also means that you will be doing more repairs. Major parts of the house, such as the roof, will need to be fixed if you own the house for a long time period, and that can be a costly repair, and so you need to be forward thinking. Just like in getting the best investment mortgage that you can, by comparing investment property mortgages rates to find the best deal. You also will want to get rental property insurance for any damages that may occur by any tenants or by the elements of nature.
Also, know your 1031 exchange rules. This is so you can sell an investment property and roll that money into another so that you won’t have to pay capital gains taxes. A must know for every real estate investor.
But, if you are only getting you investment property for a short time period, it could lose some value. In the economic crunch of 2008 and 2009, many people who bought investment property for the short term ended up losing a lot of money because they didn’t plan ahead.
Hopefully these tips have helped you out when considering if buying an investment property is indeed right for you or not. Make sure you plan, plan, plan, as many issues may arise, and with a plan in place you can keep your investment secure. But, if you don’t have a plan, your investment may be in trouble.