Things to Think of When Buying an Investment Property
If you’re thinking about buying an investment property to make money each month or sell for a profit in the future, there are a lot of things to keep in mind.
While this can be a great way to bring in extra money, you’ll first want to ask yourself if you can afford to take on new debt.
- You’ll also need to be aware that you will likely need a down payment of at least 15-20% and that mortgage rates on investment properties tend to have higher interest rates.
- You’ll want to make sure the property is in a good location that is likely to increase in value over time and in a place that will attract renters.
- It is also important to take the time to calculate your potential income, which will include the rent you can likely charge, minus things like insurance, property taxes and maintenance costs, as well as the costs of fixing unexpected things such as an air conditioner or water heater.
- If you’re not good at making home repairs that can help save you money, you’ll need to find someone to make fixes for you or hire a property manager who can coordinate that kind of work.
- It’s advisable to consult with a lawyer or accountant who specializes in real estate so you are aware of deductions you can take – such as mortgage interest, property taxes and insurance – and you’ll want to learn about local landlord laws and tenant rights.